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MAINSTREAM MEDIA REPORT- HONOLULU ADVERTISER
Bankrupt lender stole millions, trustee alleges
By Jim Dooley
Advertiser Staff Writer
World-class surfers Andy and Bruce Irons are among dozens of investors owed millions by now-bankrupt Kaua'i mortgage lender James W. Lull.
Lull, Kaua'i branch manager of mortgage lender U.S. Financial Mortgage Corp. from 1994 to 2006, filed personal bankruptcy papers in December 2006, listing more than $31 million in debts and $6.7 million in assets.
The total amount owed by Lull is now believed to be $50 million, according to Stephen Jones, attorney for the trustee overseeing Lull's bankruptcy case.
The trustee, Ronald Kotoshirodo, alleged in court papers that Lull operated a massive "Ponzi scheme" that duped investors with false promises of high interest rate returns on low risk investments.
In a Ponzi scheme, early investors are paid promised interest earnings with money obtained from later investors. The scheme collapses when new sources of investment money dry up.
Lull has not been charged with a crime and his lawyer, James Wagner, denied that his client was operating a Ponzi scheme.
FBI spokesman Brandon Simpson said his office "can neither confirm nor deny if a criminal investigation is under way."
Lull now lives in Washington state and was unavailable for comment.
Wagner said Lull "borrowed more money than he should have" and could not repay it.
"For quite a few years, Mr. Lull was quite successfully managing people's money for them," Wagner said. "People were making a great deal of money from his investments."
Lull told investors that he was making "bridge loans" to real estate customers who could not qualify for conventional mortgage loans, and that the loans eventually would be repaid.
Lull said in bankruptcy papers that he owed $1 million to three-time world champion surfer Philip A. "Andy" Irons and his brother Bruce for unpaid loans the brothers made to him between 1998 and 2006.
Both men are in Australia competing in the Quiksilver Pro surf meet and couldn't be reached for comment. READ ON - MUCH MORE - HONOLULU ADVERTISER
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