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Friday, March 31, 2000

6 charged
in $40 mil
Ponzi scam

U.S. attorney Steven Alm
says a Laie woman, 55,
managed the scheme

By Rod Ohira


Montez Salamasina Ottley describes herself as a person in good standing with the Mormon Church who "lives my religion seven days a week."

But Steven Alm, U.S. attorney for the district of Hawaii, says the 55-year-old Laie woman was the business manager and one of the leaders of an international Ponzi scheme that allegedly solicited more than $40 million from June 1997 to October 1998.

John Wright, 40; Shyuan Tan, 33; Stephen Marn, 65; Helen A. Schlapak, 59; Rande Scott Worcester, 43; and Ottley were charged in a 100-count indictment for mail or wire fraud, money laundering and other offenses that could result in lifetime prison sentences for each and fines totaling $2.75 million.

Wright, Marn and Ottley were arrested here while Tan was taken into custody in Santa Clara, Calif., yesterday.

Paul Lazzaro, 56, whom Alm described as the "idea guy and front person in the scheme," pleaded guilty to similar charges Dec. 20 and will be sentenced Oct. 16. Lazzaro agreed to forfeit more than $400,000 cash and two cars -- a 1998 Mercedes Benz and a 1998 Jaguar XK8.

The "Cayman Islands Investment Program" allegedly promised fees or interest of 8 percent a week for 13 weeks on money to be invested with the Cayman Islands government and banks, Alm said.

Fees or interest payments were taken from money invested by others.

More than 4,000 people from Hawaii, American Samoa, Japan, Singapore and the U.S. mainland made cash investments of $1,000 or more.

Assistant U.S. Attorney Larry Butrick said more than $2 million has been recovered. The majority of the investors were from Hawaii, he added.

"This was a house of cards which fell that damaged so many lives," said Alm, who said officials will try to work out a distribution system to get some monies back to victims. He said it was tragic that some investment meetings were held at churches and in people's living rooms.

"This type scheme preys on people's greed. The money being made went to line the pockets of those involved.

Ottley, an activist for Hawaiian sovereignty, declined representation by a court-appointed attorney, refused to acknowledge the charges against her and told Magistrate Francis Yamashita yesterday, "I am not under your jurisdiction."

Describing herself as a "citizen of the Hawaiian Kingdom," Ottley told Yamashita, "I'm not about to flee. I'm not a bad person. I've given everything away to the people. There will be justice served. I will fight to the bitter end."

Yamashita was to address the jurisdiction issue today at Ottley's detention hearing.

Aran Alton Ardaiz, a "friend and counsel" to Ottley, said she "had no idea the man (Lazzaro) she was working under was a Ponzi schemer."

But the indictment alleges that upon receipt of investors' monies, Marn, as president of Fidelity Escrow Services Corp., would authorize the issuance of cashier's checks on his company's account at Hawaii National Bank and then, as directed by Ottley, order specific denominations of cash to be readied by Hawaii National Bank for pickup by Wright or Worcester.

Fidelity Escrow Services Corp. was established to promote the scheme by converting investors' wire transfers and checks into cash, from which fees or interest payments would be made and profits derived.

To avoid filing transaction reports required by federal law, the defendants structured cash deposits and withdrawals in excess of $10,000 into amounts of $10,000 or less, the indictment says.

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