La'ie woman sentenced in Ponzi scam
By David Waite
Advertiser Courts Writer
A La'ie woman who was one of the principal operators of a Ponzi scheme that bilked approximately 5,000 investors out of more than $66 million was sentenced in federal court yesterday to almost 27 years in prison.
In a rambling, hour-long statement filled with biblical references, Montez Ottley told U.S. District Judge Manuel Real she was a victim of the investment scam corporation she operated and that she never deliberately set out to steal from anyone.
Ottley told the judge that had she not been arrested, investors would have seen the return they were promised.
At times, Ottley referred to Assistant U.S. Attorney Larry Butrick, Real and FBI investigators as "vessels" that had gotten "far off course" in their efforts to prosecute her.
Ottley launched into a second harangue when Real denied her request to be released from custody while she files an appeal, but the judge told her: "Your vessel just sank."
Ottley, who demanded to represent herself at her trial earlier this year, turned and blew kisses to friends and relatives in the courtroom as Real pronounced sentence.
After a four-day trial that ended Feb. 22, a jury found Ottley, 56, guilty of all 14 counts brought against her including mail fraud, wire fraud, money laundering, and conspiracy.
Prosecutors said Ottley's victims were swindled in a scheme that operated for a year, starting in the fall of 1997.
Richard Gronna, who served as backup attorney for Ottley throughout her trial and the sentencing yesterday, told Real that Ottley was tricked by former East Coast resident Paul Lazarro into believing that that the so-called "Cayman Islands" investment scheme was legitimate.
Because Ottley made an investment with Lazarro and got a return on it, she believed she could help friends and relatives make money, too, Gronna said.
"She never set out on a course to be involved with Mr. Lazarro in an illegal pyramid scheme," Gronna said. "She got caught up in it."
Lazarro has pleaded guilty to similar charges in the case, and is scheduled to be sentenced today.
In urging Real to set a stiff sentence, Butrick told him that Ottley was "the one with all of the contacts" who approached investors in Hawai'i, on the Mainland and in American Samoa.
He said Ottley had total financial control of the investment scheme.
"It can't be argued that she was gullible and didn't know what was going on — she ran the operation," Butrick said. "In her pitch to investors, she said they wouldn't have to pay taxes, wouldn't have to use their real names and wouldn't have to use their Social Security numbers."
He said Ottley did profit from the scheme and paid each of her seven children $600,000 to $900,000.
Butrick said after the sentencing that government officials have been able to recover about $3 million of the $66 million that was invested in the scheme. A trustee has been hired to find out who the investors were in hopes of returning some of the money seized from Ottley and others involved in the scheme.
He said many of the initial investments were in the range of $1,000 and later grew to $5,000 and finally to about $10,000 before the pyramid collapsed. He said one man from Japan invested $100,000 in the scheme which was taking in nearly $2 million a week before it was shut down.
