Ponzi victims describe their trauma
|||Alleged scam had facade of luxury|
By Dan Nakaso
Advertiser Staff Writer
By Dan Nakaso
Victims of a $30 million Ponzi scheme in Hawai'i told a federal court yesterday the scam wiped out their savings and they want law enforcement officials to get more money back from the perpetrator.
"My wonderful life as I knew it is now gone," Kaua'i hospice worker Jeannie Pheasant told U.S. District Judge Susan Oki Mollway. "My gut tells me this money is still hidden."
In September, James Lull a former Kaua'i mortgage broker admitted to defrauding as many as 50 victims out of as much as $30 million. He faces up to 20 years in prison and a fine of $250,000 as well as payment of restitution to his victims. Yesterday, Mollway said Lull owes $26,515,904 in restitution.
Lull was scheduled to be sentenced yesterday. But after some of his victims, such as Pheasant, told Mollway they believe he's hiding assets, Mollway postponed sentencing until May 14.
Pheasant said that she was living frugally and had invested almost everything she had with Lull an amount that she declined to reveal yesterday. At one point, Pheasant told Mollway that she asked Lull if he would swear on a Bible that her money was safe.
"He said, 'I will swear on my children's lives that your money is safe,' " Pheasant told Mollway.
Pheasant now works three to four different jobs and does not have time to help hospice patients die as they wish, including her own father, who died Dec. 31.
"This whole thing has devastated me," she said.
Like the others, Pheasant was not sworn in yesterday and did not officially testify in the proceedings. Instead, they spoke at a microphone from the court gallery behind Lull, who did not turn around to look at his victims.
Lull's victims said they invested in purported real estate deals that Lull promised would quickly pay high rates of return.
Lull promised one of his victims, Jon Anderton, "interest at 1 percent a month on all amounts advanced plus all or a share of the 'points' that Lull earned from his borrowers," according to the trustee overseeing Lull's bankruptcy.
Lull filed for bankruptcy in 2006, listing $31 million in debt to dozens of creditors.
Lull used the money from his victims for "personal purposes," according to the bankruptcy trustee, Ronald Kotoshirodo.
Lull made some payments to early investors with the money given him by later investors, Kotoshirodo said.
William Britt told the court yesterday that he and his wife invested with Lull so they could build their mortgage-free dream house on Kaua'i. Britt hoped to semi-retire from his work as a graphic artist and his wife planned to quit working to take care of their daughter.
Instead, they now have a 30-year-mortgage and have only been able to build the home's garage, which the family is living in to the displeasure of their neighbor.
"And getting back into the workforce isn't easy in this economy," Britt said. " ... Our confidence is shattered. He's totally taken our lives. ... We were so trusting and he took that."
Anderton told the judge that he had no credit card bills and $80,000 left on his mortgage before he invested with Lull.
Now he owes $100,000 in credit card charges, has a $1 million mortgage with little equity and is using his children's college funds for living expenses.
Anderton can no longer help pay the college expenses for his niece, who had to drop out of school. He also was unable to continue housing his in-laws, who helped care for his children, and the in-laws have since moved back to Russia.
After hearing from three victims yesterday, Mollway said she was not convinced that Lull had met the conditions of accepting responsibility for his actions, which could affect the federal guidelines for determining his sentence.
If Lull is hiding some of the assets from his Ponzi scheme, Mollway said, "The acceptance of responsibility issue is a big concern for me."
During a break in the hearing, Michael A. Lilly the lawyer for bankruptcy trustee Kotoshirodo compared Lull to Bernie Madoff, who pleaded guilty in February to bilking billions of dollars out of investors in what some are calling the largest Ponzi scheme in history.
"This is Hawai'i's Madoff," Lilly said. "This is a mini-Madoff."
Attorney Scott Batterman spoke on behalf of his client, Alice Gordon, whose health is declining and did not have the money to fly to Honolulu yesterday. Gordon lost at least $4 million to Lull, the largest amount of any of his victims, Batterman said.
Asked wether it was Gordon's health or finances that prevented her from appearing at Lull's hearing yesterday, Batterman said, "Frankly I don't think she could stand to be in the same room as him."
Reach Dan Nakaso at email@example.com.