Maui News - U.S. Bankruptcy Trustee Dane Field secured a settlement of $6 million from Mortgage Store owners George Liddell and his daughter, Holly Hoaeae. Lidell and his wife will turn over $5 million. Hoaeae and her husband, Kamakana, will surrender $1 million.
An accounting analysis revealed that the company has been insolvent for as long as four years and engaging in a Ponzi scheme. Lindell and Hoaeae continued to accept cash for promissory notes as late as 2010, including a $250,000 from one woman only weeks before filing for bankruptcy in Septemeber of that year.
Field said the Mortgage Store was engaging in "bank-like" borrowing schemes, which were unregulated.
The Mortgage Store claimed that Texas real estate investments were reported to be exceedingly higher than actual value-a failed self-storage scheme that was never actually constructed was claimed to be worth a total of $40,000. Many creditors came close to losing their homes and some didn't even have enough to cover the cost of daily living.
Lindell and Hoaeae also reportedly made large loans to employees that were not repaid. Other loans, such as second mortgages, were still carried on the books even though many of the debtors had declared bankruptcy.
The Mortgage Store, founded in the '90s in Kihei, made loans and sold life insurance until around the time that Lindell sold the business to his daughter in 2008.