A showdown is looming between the FBI and a Native Hawaiian sovereignty group under investigation for allegedly selling fake treasury bonds and fraudulent property titles to individuals and families in financial distress.

Last month, the FBI raided four Maui homes, seized records and cars and confiscated more than $100,000 from bank accounts as part of an ongoing investigation into Ko Hawaii Pae Aina, according to court documents.

The group claims exclusive rights to the Hawaiian archipelago and says it is not subject to government laws and that those who live on its lands are also "outside of the foreign assertion of laws and illegal codes."

The FBI disagrees, alleging the group is marketing a "Royal Hawaiian Treasury Bond" to homeowners behind on their mortgage payments on O'ahu, Maui, the Big Island and Kaua'i. The sellers promise that for a fee of $2,500 to $10,000, the bond will cover any outstanding debt — mortgage, credit card and other debt — because the bond holder's property will be part of an "untouchable Hawaiian nation."

The schemes also provide the purchaser with "Royal Patents" and "Court Decrees" that the group says proves that the land they own is exempt from U.S. laws and financial regulations. And they promise to block property taxes and override credit card debt, all packaged with the promise of ownership in the true Hawaiian nation, which the schemes claim is legally exempt from U.S. regulations.

FBI special agent Brandon Simpson would not comment on the investigation. But details of the probe are included in court documents filed by the U.S. Attorney's office.

"The United States is conducting a criminal investigation into the activities of various individuals involved in the marketing of a program which allegedly provides mortgage loan assistance to individuals experiencing financial difficulties," wrote U.S. attorney Lawrence L. Tong, in the government's response to a motion to return the seized property and cash. "The government has not yet brought charges against any of the individuals, and the nature and scope of the ongoing investigation is confidential."

Ko Hawaii Pae Aina operating officers John D. Oliver, Petro T. Hoy, Leatrice Lehua Hoy, Pilialoha K. Teves and Mahealani Ventura-Oliver did not respond to messages seeking comment.

In response to a series of searches and seizures on Maui in April, the operating officers filed several motions in federal court claiming the government had no right to seize cars, money and property because they have no authority over their foreign kingdom.

Tong wrote that the group's officers received copies of the search warrants, which represented the court's determination that the searches and seizures were supported by probable cause.

On April 7, the FBI raided four Maui homes and seized cash from bank accounts belonging to the group.

FBI RAIDS, SEIZURES

FBI agents seized a 2009 Toyota Prius driven by Leatrice Lehua Hoy, and 2005 and 2006 Toyota Tacoma pickup trucks owned by John D. Oliver and Ihilani K.A. Catagul, according to documents filed by U.S. attorneys in response to the group's assertion that their assets were seized without warrant.

Assistant U.S. attorneys Tong and Rachel S. Moriyama also laid out the justification for the confiscation of more than $100,000 the government asserts the group members stole from duped investors.

The government seized $22,063.29 from a Petro T. Hoy trust at First Hawaiian Bank, and $79,087 from the Pilialoha K. Teves Trust at Hawaii National Bank.

Scams based on claims that Hawai'i lands are owned by a Hawaiian Kingdom and therefore exempt from federal, state and county laws aren't new.

In 1991, Nathan Brown was convicted of 18 felony counts for his part in a scheme in which a group called the Royal Kingdom of Hawaii filed false tax returns with the Internal Revenue Service claiming they had paid thousands of dollars to elected officials, including then-Gov. John Waihee and others, supposedly in protest of the government claiming sovereign lands.

Brown appealed his convictions, but the appeal was rejected in 1993.

Brown was sentenced to 6 1/2 years in prison but evaded authorities for 12 years before being arrested in 2003.

In September 1997, Perfect Title Co. founders Donald A. Lewis, David Keanu Sai and a company secretary were arrested for investigation of theft, racketeering and tax evasion for processing and validating $1,500 title searches and issuing liens that were used to block title transfers on property sales.

Sai was eventually sentenced to five years probation and a $200 fine.

In February 2002, authorities shut down the Royal Kupuna Exchange.

The exchange told investors that a proclamation by the true Hawaiian kingdom's King Samuel Keolamauloa Kaluna II would trigger the sale of $1 billion in treasury bonds sold through the Royal Kupuna Exchange.

The bonds paid out in Hawaiian Kingdom dollars, which, according to the group, were worth five times the value of U.S. dollars and were sold in $1,000 increments.

The group claimed sovereignty and declared that the United States and the state of Hawai'i had no jurisdiction.