A 35-year-old woman admitted collecting more than $1 million from friends and relatives in a Ponzi scheme started by a man who was serving time in federal prison for operating another Ponzi scheme.

Kapua Keolanui pleaded guilty in federal court yesterday to one count of wire fraud and is cooperating with authorities.

"I started a company called Paradise Trading. I went to my friends and family and offered them to invest in the company," she said.

The government says Keolanui collected $1,055,573 in 2007 and 2008 from six people who cashed out their savings, retirement accounts and mortgages to "invest" in her company. Keolanui told them she used the money to trade in commodities and promised them high returns when in fact she was using money from later "investors" to pay off earlier investors, according to a criminal complaint against her.

Keolanui sent $663,000 to husband and wife Perry Jay Griggs and Rachelle Griggs in Las Vegas, received $467,000 back to pay off early investors, and used the rest of the money she collected on startup ventures for her family including coin-operated video gambling machines, a dump truck business and a tractor-trailer business, according to federal court records.

A federal grand jury charged the Griggses last month with mail and wire fraud for allegedly operating a Ponzi scheme while Perry Griggs was serving federal prison time at Nellis Air Force Base in Las Vegas.

Keolanui’s husband had served in that prison with Perry Griggs.

The Griggses collected $3 million, mostly from Hawaii inmates also serving time at Nellis and their families, the indictment said.

They also helped Keolanui start Paradise Trading, according to federal court records.

The Ponzi scheme started to collapse when Perry Griggs was released in September 2008. Authorities say he and his wife disappeared in January.