2 Former Maui Residents Sentenced for Charges in $26M Ponzi SchemeSeptember 16, 2016, 5:03 PM HST · Updated September 16, 5:04 PM 0 Comments
United States District Judge Derrick K. Watson yesterday sentenced George Lindell, 68, and Holly Hoaeae, 41, both formerly of Maui, to 210 months and 120 months imprisonment, respectively, for charges related to the operation of a Ponzi scheme in which 166 individuals were induced to invest over $26 million dollars.
A federal jury found Lindell and Hoaeae guilty of eight counts of mail fraud and two counts of wire fraud after a 27-day trial concluding in May 2015. Lindell was also convicted of four counts of money laundering.
Florence T. Nakakuni, United States Attorney for the District of Hawaiʻi, said that Judge Watson also ordered both defendants to pay restitution of $8.9 million dollars representing the net loss to investors in the case.
According to evidence produced in court, Lindell and Hoaeae began an investment scheme in connection with their operation of their business “The Mortgage Store”, in which they issued promissory notes promising to pay a guaranteed rate of return of seven percent.
Justice officials say Lindell and Hoaeae, using radio ads, magazines and a weekly radio show, urged potential investors to attend their weekly workshops at “The Mortgage Store” where they taught seminars on how to “harness” or use the equity in their homes for investment purposes.
According to the Judiciary, Lindell and Hoaeae would then utilize their status as mortgage brokers to refinance investor residences in order to extract the equity in investor homes for the purposes of investment. Authorities say Lindell and Hoaeae would then urge investors to invest money in their investment scheme, known as “The Parking Lot”, where investors could “park” their money and earn guaranteed rates of interest.
Lindell and Hoaeae advertised the Parking Lot as “safe” and invested largely in secure corporate bonds in Fortune 500 companies, the Judiciary reports. In truth and fact, Lindell and Hoaeae were investing in “junk” bonds and/or marginal real estate investment activity and using the bulk of the funds to support their luxurious lifestyles and pay existing investors with new investor funds, according to Judiciary officials.
According to Justice officials, during the scheme Lindell built a $3.5 million dollar residence above Lahaina in large part with investor funds and Hoaeae used hundreds of thousands of dollars in investor funds to fund her personal lifestyle including trips, automobiles and pay extensive credit card debt.
The investigation of this case was conducted by the Federal Bureau of Investigation. The prosecution was handled by Assistant United States Attorneys Ken Sorenson and Andrea Hattan.