Two former Maui residents were sentenced Friday for their roles in a
$26 million Ponzi scheme.
George Lindell, 68, was sentenced to 17 years and six months in prison. Holly Hoaeae, 41, received 10 years.
In May 2015, a federal jury found Lindell and Hoaeae guilty of eight counts of mail fraud and two counts of wire fraud. Lindell was also convicted of four counts of money laundering.
Both defendants were ordered to pay $8.9 million to the victims of the scheme.
According to evidence presented in court, the two built an investment scheme in connection with their business, “The Mortgage Store,” promising to pay a guaranteed rate of return of 7 percent.
Prosecutors said the defendants used radio ads, magazines and a weekly radio show to lure potential investors to attend their weekly workshops, where they taught seminars on how to use the equity in their homes for investment purposes. Lindell and Hoaeae would use their status as mortgage brokers to refinance investor residences in order to extract the equity in investor homes for the purposes of investment.
Lindell and Hoaeae would then urge investors to invest money in their investment scheme, known as “the Parking Lot,” where investors could “park” their money and earn guaranteed rates of interest, prosecutors said. Lindell and Hoaeae advertised the Parking Lot as “safe” and invested largely in secure corporate bonds in Fortune 500 companies.
However, according to prosecutors, Lindell and Hoaeae were investing in “junk” bonds and marginal real estate investment activity and using the bulk of the funds to support their own luxurious lifestyles and pay existing investors with new investor funds. While the scheme was in operation, Lindell built a $3.5 million residence above Lahaina in large part with investor funds and Hoaeae used hundreds of thousands of dollars in investor funds to fund personal trips and automobiles and to pay extensive credit card debt, prosecutors said.
The case was investigated by the FBI and prosecuted by assistant U.S. attorneys Ken Sorenson and Andrea Hattan.
