Two members of the Maui-based Hawaiian sovereignty group, Ko Hawaii Pae Aina, have admitted they sold fake “private bonds,” “bonded promissory notes” and other bogus documents which they falsely claimed could be used to block bank foreclosures and pay off debts, including home mortgages, credit card debt, and taxes. The group met prospective victims through seminars and workshops offered on Hawaiian history and land rights.

John Oliver and Leatrice Lehua Hoy quietly entered guilty pleas in U.S. District Court in Honolulu in May 2012. The two agreed to forfeit money, vehicles, and other property seized during raids on several homes in 2009, and also agreed to cooperate with prosecutors and testify against the remaining defendants in any future trial. The pledge of cooperation includes providing testimony against their spouses.

Oliver pleaded guilty to two counts of conspiracy, while Hoy pleaded to a single count, based on a superseding indictment filed last year. In exchange, the government agreed to drop all remaining charges.

The two face penalties of up to five years in prison, a $250,000 fine on each count when they are sentenced in March 2013. They also face court-ordered restitution of money lost by their victims in the scheme.

Lehua Hoy’s husband, Peter Hoy, also asked to change his plea to guilty in exchange for dropping additional charges contained in the indictment. However, Judge Michael Seabright questioned “whether defendant has sufficient ability to consult with his attorney with a reasonable degree of understanding.”

Seabright then ordered a psychological evaluation to determine whether Hoy is competent to stand trial or face additional proceedings in the case.

Also still facing charges in the case are Mehealani Ventura-Oliver, generally recognized as the leader of Ko Hawaii Pae Aina, and Pilialoha Teves.

According to John Oliver’s plea agreement, the defendants were associated with Ko Hawaii Pae Aina, Hawaiiloa Foundation, and The Registry. Hawaiiloa Foundation offered workshops and seminars on Hawaii history and also held private meetings where they “marketed a debt assistance program which they claimed could eliminate mortgage, credit card, and other debt.

Their customers “were told that each individual has an account at the United States Treasury that can be accessed through various ‘bonds,’ ‘promissory notes’ and other documents purportedly issued by the United States Treasury or the State of Hawaii.”

The defendants then prepared paperwork and told customers it could be used to pay off debts.

The government alleges the defendants, through the Hawaiiloa Foundation, collected approximately $468,573.65 in fees from more than 100 participants in its programs during the 12 months ending March 4, 2009.

According to the plea agreement, Oliver knew the documents were not real and could not actually be used to pay debts, and that the defendants sold their program and collected fees “while knowing that the bonds that were prepared were fictitious instruments.”

Oliver also pleaded guilty to filing false federal tax returns for himself and others who participated in the groups debt elimination program. These returns asked for fraudulent refunds of more than $2.5 million “based on information the defendant (Oliver) knew was false and fraudulent.”