CLICK TO SUPPORT OUR SPONSORS

Starbulletin.com


Saturday, June 2, 2001



Former Hawaii
man indicted in
$74 mil fraud scheme

One-time head of the
Polynesian Cultural Center
may have bilked isle residents


By Gordon Y.K. Pang
Star-Bulletin

A former head of the Polynesian Cultural Center is sitting in a federal detention center in Seattle awaiting trial for an alleged Ponzi scheme that authorities say defrauded $74 million from more than 2,500 victims in the United States and Canada.

William Hughes Cravens, 59, was arrested at his La Jolla, Calif., home on April 3.

Assistant U.S. Attorney Carl Blackstone in Seattle said he does not know if any of the investors are Hawaii residents. The editor of a local Samoan publication, however, said he has spoken to at least three local victims.

Cravens headed the Polynesian Cultural Center from 1975 to 1983 but has not lived in Hawaii since the early 1990s.

According to a 48-page indictment, Cravens was one of five people charged with mail fraud, wire fraud, money laundering and conspiracy.

Under a Ponzi scheme, a continuing stream of investors puts money into a fund that is used to pay the promised returns of others who invested previously.

Investors, at least initially, were promised a return of 120 percent a year and that their principal was guaranteed against loss, according to the indictment.

Cravens first became involved with the scheme in early 1999, the indictment said.

The California-born Cravens, who is half-Samoan and was once president and board chairman of the Development Bank of American Samoa, attempted unsuccessfully to establish banks in both Western Samoa and the Territory of American Samoa, the indictment said.

He did, however, establish a corporation in American Samoa called the Private International Development Banc of American Samoa. While it was issued a business license authorizing it to "engage in 'finance,'" the company was never chartered as a bank nor authorized to act as a bank, the indictment said.

The company opened a bank account at ANZ Bank in Apia, Western Samoa.

"Once the bank account was opened, investors were falsely led to believe that PIDB was a real bank, instead of a shell corporation with a bank account, and were induced to send their funds to the PIDB account at ANZ bank," the indictment said.

American Samoa revoked PIDB's certificate of incorporation in November 2000 because it was not authorized to act as a bank.

The indictment said part of the funds were used to pay commissions to those who solicited investors. Other funds were placed into highly speculative investments "which were either fraudulent or so risky that they resulted in a total loss of funds." Some were also used by defendants for their personal use, the indictment said.

More than $25 million in investor funds were transferred to the Samoan bank accounts, the indictment said.

Tanielu "Daniel" Sataraka, who publishes the monthly Samoan International News, said he has spoken to three people who say they were taken by the scheme for a total of more than $50,000. Sataraka declined to name the three, stating he spoke to them on condition that their names were not to be made public.

Cravens' standing as a respected member of the Samoan-American community may have helped him convince people to invest in his scheme, Sataraka said.

Poor immigrants, in particular, "want to make a fast buck" and cannot distinguish between legal and illegitimate businesses, he said.

Cravens was appointed general manager of the Polynesian Cultural Center in 1975.

In February 1983 he was given the additional responsibility of president, but he resigned from the center in April to begin his own company.

He returned to Hawaii to be vice president and chief operating officer for Cove Marketing, a stint that lasted less than a year before he returned to the mainland.

Some who have known Cravens over the years were shocked to hear of his arrest.


STARBULLETIN A former head of the Polynesian Cultural Center, above, is
sitting in a Seattle prison awaiting trial for an alleged $74
million Ponzi scheme.



"Bill has been a real stalwart member of the community," said Kela Miller, who works for Hawaii Reserves Inc., which, like the Polynesian Cultural Center, is owned by the Mormon Church. "He is very much loved in the community."

Roy Tokujo, president of Cove Entertainment, said Cravens was "devoted to his family," noting he has 14 children.

Tokujo said Cravens never gave any indication that he would be capable of running an illegal scam.

"I'm sorry to hear he's in trouble," Tokujo said. "I hope he'll come out OK. I hope for his family's sake everything turns out all right."

According to accounts in mainland newspapers, many of the investors were attracted to the scheme through a computer Web site that caters to tax protesters, libertarians, constitutionalists and members of the Patriot Movement headed by John W. Zidar, another of Cravens' co-defendants.

A group calling itself the Isaacson Society, on its Web page, gives updates on actions involving "our legal team" and "our assets." It also urges members to help fund the legal funds for the five defendants.

"If you as members do not support this cause now, there will be no society left, and the government will have won," the Web page states.

A separate organization, the World Community Education Society, sponsors a Web page titled "Supporting Our Brothers in Prison" and calls on members to write to the defendants at the Federal Detention Center in Seattle.

Another page sponsored by the society appears to be a press release from Cravens claiming his innocence.

According to the page, Cravens said that he and Zidar "had come to an agreement he would help me finance cultural centers and establish a bank that I had already begun the process of formulating outside of U.S. jurisdiction to finance cultural center projects."

The page also said he was successful in chartering the Private International Development Banc of American Samoa, which "began to accept deposits through wire transfers via its correspondent bank ANZ Bank Samoa."



E-mail to City Desk


Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
[Feedback]



© 2001 Honolulu Star-Bulletin
http://archives.starbulletin.com