Jurors in the federal trial of Mahealani Ventura-Oliver and Piialoha Teves heard yesterday from two victims who said they paid thousands of dollars to the defendants and associates after being told they would then receive documents to pay off their outstanding mortgages, avoid future property taxes, and be entitled to additional federal tax credits tax credits.

Federal prosecutors say Ventura-Oliver and Teves were key participants in a conspiracy that defrauded local homeowners seeking relief from mortgage debts.

Two defendants in the case, Ventura-Oliver’s estranged husband, John D. Oliver, and Leatrice Lehua Hoy, have already entered guilty pleas and are cooperating with the prosecution. Charges against a fifth defendant, Peter Hoy, were dismissed early this year after a psychological evaluation found him unfit to stand trial.

The trial began October 1, and is expected to continue through next week. The trial has received no media attention so far, despite the high profile defendants, the extensive publicity at the time of their arrests, and the number of apparent victims.

Wednesday’s witnesses–Guy Aina of Hana and Tanya Andaya of Kula–both said they attended public seminars put on by the Hawaii Loa Foundation or Ko Hawaii Pae Aina, and were then invited to pay to attend private meetings where the mortgage payment “program” was detailed.

Both were later provided a “bonded promissory note” and a stack of related documents, and were instructed to send the documents to their mortgage lenders, as well as to credit bureaus and to the IRS, and to file certain documents at the Bureau of Conveyances. Both testified they had been told that if they followed instructions, their mortgage debts–both in the area of $150,000–would be wiped out.

Andaya said she was advised to ignore any notices from lenders warning of defaulting on their loans, and not to make any additional mortgage payments.

Andaya said she was told making any additional payments would undermine the program and render the “bonded promissory note” worthless.

Prosecutors intend to have as many as twenty victims testify. They have also filed a motion seeking court approval to allow John Oliver to testify.

According to the government’s motion, “John Oliver is expected to testify about arguments he had with Ventura-Oliver concerning whether they should sell the mortgage elimination process to others, especially when they knew it did not work.”

Although the Hawaii Loa Foundation wrapped the “bonded promissory note” scheme in sovereignty claims it alleges stem back to the overthrow of the Hawaiian Kingdom government, its methods mimic similar frauds promoted by so-called “sovereign citizen” groups on the mainland.

A 2010 FBI introduction to the “Sovereign Citizen” movement includes a description of the purported “bonded promissory note”:

Sovereign citizens issue these documents to access funds in their “US Treasury Direct Account.” Typically, there is a stipulation requesting the recipient respond within a specified amount of time. Non-response is viewed as “acceptance and honoring of the bond, the associated transactions, and presentments.” Bonds expire at a specified time period, typically upon the death of the author. The goal of the bond is to allow the filer to pay debts using their “US Treasury Direct Account.”

In the Hawaii Loa Foundation version, these accounts were available to those of Hawaiian ancestry and originated in their native land rights. However, it appears many of the documents were simply adapted from those available online from other “sovereign citizen” groups.