Grand jury indicts father, daughter in alleged fraud case
A federal grand jury charged a former Maui father and daughter – The Mortgage Store owners George Lindell, 65, and Holly Hoaeae, 39 live on the mainland – with bilking more than $8.6 million from unsuspecting investors in an alleged pyramid or Ponzi scheme from January 2005 to November 2010, according to the U.S. Department of Justice.
The 17-count indictment returned Thursday includes 13 mail fraud offenses, three wire fraud violations and one count of money laundering conspiracy, federal prosecutors said. Each charge carries a maximum sentence of 20 years in prison.
The indictment also seeks forfeiture of various properties and assets, up to $8,626,589, which the federal charges allege represent the total amount of proceeds obtained as a result of the fraud.
Lindell and Hoaeae also face fines of up to $250,000 for each of the fraud violations and up to $500,000 or twice the value of the funds or financial instruments involved in the conspiracy charge.
Hawaii U.S. Attorney Florence Nakakuni said that, according to the indictment, the defendants “induced others to invest funds with them in an investment described by Lindell and Hoaeae as ‘the Parking Lot,’ where investors could earn between 6 and 8 percent return on their investment, but instead of investing the funds into safe holdings such as bonds, as represented, the defendants used the funds for their personal needs.”
Neither Lindell or Hoaeae was licensed by the state to accept deposits or investments, federal prosecutors said.
Lindell and Hoaeae’s personal expenses included the construction of a residence in Lahaina, the purchase of a Lexus automobile, payment of a $27,967 debt on a truck loan and payment of $28,500 for a New Zealand safari.
FBI agents investigated the case, which is being prosecuted by Assistant U.S. Attorney Ken Sorenson.
In January 2012, Lindell and Hoaeae agreed to surrender $6 million obtained through a Ponzi scheme. Their business, The Mortgage Store, filed for bankruptcy, owing $10 million in September 2010.
According to an accountant’s analysis, The Mortgage Store was insolvent at least as early as June 2007, but Lindell and Hoaeae continued to accept cash in exchange for promissory notes.
In September 2010, Hoaeae sent out a letter to more than 100 creditors, many of them Mauians, that the business could no longer meet its obligations. Some of the victims lost their life savings, and others took Lindell’s advice to take the equity from their homes and invest it with him.
* This article includes a correction from the original published on Friday, May 24, 2013. The story should have referred to the father and daughter as former Maui residents. The Maui News apologizes for the error.