The FBI is investigating several local companies that allegedly bilked homeowners out of more than $300,000 on O'ahu, the Big Island and Maui with false promises to help them avoid foreclosure, according to local lenders and law enforcement officials.

The families, many of which are Native Hawaiian, were charged between $2,500 and $10,000 to attend seminars or counseling sessions on avoiding foreclosure, and were told they would receive bonds worth $1 million that could be used to pay off the outstanding balance of the mortgage.

Officials said the bonds were bogus and no mortgages were paid off.
[...]
The bogus bonds are not sold through an investment firm or brokerage house, as legitimate bonds are. They also purport to represent ownership in a fictitious Hawaiian nation.

The companies pushing the bogus bonds, several claiming to be affiliated with Native Hawaiian sovereignty movements, are targeting Native Hawaiian homeowners and others who are facing foreclosure.

After attending the seminars, families are told that a $1 million "Royal Hawaiian Treasury Bond" will be sent to the homeowners' bank with a letter explaining that it will cover the outstanding balance of the mortgage.

The companies tell the homeowner that because they are members of the "Hawaiian nation," the bank will no longer be able to demand money from them because they are the land's "rightful owners."

U.S. Department of Justice
Federal Bureau of Investigation

For Immediate Release
Monday, November 17, 2008

FBI ALERTS PUBLIC TO RECENT FORECLOSURE FRAUD SCHEME

Promises to pay off mortgages with phony Hawaiian and Government Bonds

Honolulu, HI -- The FBI is warning the public to avoid falling victim to an on-going scheme designed to take advantage of island homeowners facing foreclosure or other financial difficulties. The scheme, which comes in several variations, usually starts out by offering individuals a "too good to be true" scenario in which 1) a person can stop making their mortgage payments and property taxes, 2) an artificial bond will pay off their mortgage, and 3) the homeowner can keep their home without a foreclosure or eviction. The phony bonds have utilized government officials names in order to add legitimacy. The scheme has utilized Hawaiian heritage rights as part of the financial backing for the phony bonds, thus preying on Native Hawaiians. Those who have participated have paid thousands of dollars for the organizers' services. The schemes utilize a variety of legal documentation filed with government offices to make them appear legitimate. Further, the schemes have been reported to use false tax return processing which shows the participant being owed large sums of money without having a legal right for such refund. If you, or anyone you know, has been contacted for participation in one of these schemes, please contact the local FBI office.