Be careful in search of investment haven
A former Kauai mortgage broker scammed investors of more than $30 million.
Wall Street's collapsing house of cards has made many jittery Americans consider looking elsewhere to protect or even enhance their life savings. The case of James W. Lull, a former Kauai mortgage broker, is a timely reminder that they should guard against investing in anything that seems too good to be true.
Lull pleaded guilty in federal court this week to bilking as many as 50 people out of more than $30 million. While branch manager of U.S. Financial Mortgage Corp., Lull made side deals with clients for them to invest in real estate, memorabilia and, of all things, jewel-studded pool cues.
Authorities describe Lull's operation as a Ponzi scheme, an old scam named after Charles Ponzi, who swindled clients in 1920 by promising 40 percent returns and using their money to pay previous investors. Lull's case is a wake-up call that Hawaii residents remain vulnerable to scams that have been used here before.
Montez Ottley of Laie was convicted in 2004 and is serving a sentence of nearly 20 years for applying the Ponzi scheme that lured investors from Hawaii, American Samoa, the mainland and Japan to put their money in "Cayman Islands Investment." Ottley pocketed $66 million.
Of more infamy, Ponzi schemer Ronald Rewald fancifully used kamaaina names for his investment business - "Bishop, Baldwin, Rewald, Dillingham and Wong" - and persuaded 400 people, including business and social leaders, to fork over more than $22 million.
An angry judge sentenced Rewald in 1985 to 80 years in prison, but he was released from prison a decade later after suffering a back injury. Rewald claimed to have been operating under the auspices of the CIA. People who believe him to this day are sitting ducks for the next scam.
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