Search for Lull assets continues

LIHU‘E — The trustee for the estate of the late James Lull has acquired a lot in the under-construction Kulana Subdivision off Olohena Road in Wailua Homesteads, and recently sold another of Lull’s Kaua‘i assets.

Sold for $400,000 to Soul Construction in December was Lull’s former U.S. Financial Mortgage Company office on Kukui Street in Kapa‘a.

Of that $400,000, only around $63,000 will be made available to Lull creditors, after bank debt and other claims on that property are settled, said Michael Lilly, an O‘ahu attorney representing court-appointed bankruptcy trustee Ronald Kotoshirodo.

In another court judgment finalized earlier this month, Kotoshirodo agreed to take possession of a lot in the Kulana Subdivision, which likely will be sold, with proceeds after expenses used to pay off creditors.

Lull pleaded guilty in Honolulu federal court to a single count of wire fraud for allegedly defrauding dozens of Kauaians out of millions of dollars via schemes in which his fellow Kauaians were promised high percentage returns on their cash investments.

Federal prosecutors said Lull, who managed the Kapa‘a office of U.S. Financial Mortgage Corporation for several years in the 1990s, used some of the money from investors to pay off earlier investors, but used most of it for personal purposes.

Lull died last year in a single-vehicle crash near Yakima, Wash., on the day he was scheduled to be sentenced in Honolulu federal court. Police investigators in Washington ruled Lull’s death a suicide.

Lull had been free on a $100,000 signature bond, meaning he did not have to pay a penny for his temporary freedom, and was living in the Pacific Northwest.

Lilly said he is convinced Lull did die in that accident, but still gets calls from people certain Lull is alive and well in Costa Rica or some other locale.

Lilly and Kotoshirodo continue to aggressively pursue monetary judgments against known associates of Lull, and continue the search for Lull assets, though Lilly said in a telephone interview Monday that it’s highly unlikely they’ll be able to recover anywhere near the estimated $20 million to $50 million Lull allegedly defrauded from fellow Kauaians.

To date, some $2.5 million in collections and judgments have been awarded to Kotoshirodo, with more coming, Lilly said.

“Our goal is to make a return to creditors, those who are qualified, those who have qualified claims, and we expect some return,” said Lilly. “Not a lot. Better than nothing.”

Among those who lost money to Lull were professional surfing champions Bruce Irons and Andy Irons of Hanalei, and former Kaua‘i magazine publisher Gregg Gardiner.

At least one of the Kaua‘i victims filed a claim in U.S. bankruptcy court seeking over $10 million, and several others filed claims of over $1 million. Gardiner’s claim is for over $3 million. The Irons brothers’ claims are each for less than $1 million.

Had Lull been sentenced, he could have faced up to 20 years in prison, a fine of $250,000 and payment of $20 million to $30 million in restitution to victims.v

Lull in his plea agreement voluntarily pleaded guilty to wire fraud, and admitted to defrauding 50 or more people out of more than $20 million but less than $50 million.

Since Lull filed personal bankruptcy papers in December 2006, listing more than $31 million in debts and $6.7 million in assets, officials have been trying to locate his assets, often having to resort to subpoenas and interviews with officials at banks where some of Lull’s assets are believed to be held.

Regarding the Kukui Street property, Joshua Copeland, president of Soul Construction, said Lull’s former office is being converted into offices for Soul Construction, with around 800 square feet of the 1,700-square-foot building (on 9,417 square feet of land) subleased to a small company.

• Paul C. Curtis, staff writer, can be reached at 245-3681 (ext. 224) or pcurtis@kauaipubco.com.