In September, the US Attorney’s Office in Honolulu announced it had charged six people with conspiring to defraud the IRS, and last week announced the last three defendants had been arrested.

According to the press release (which is attached below):

As part of the tax fraud scheme, the conspirators allegedly filed fraudulent individual tax returns and other tax documents that reported false withholdings from mortgage lenders and then claimed substantial refunds from the IRS. After processing the false returns, the IRS allegedly issued refunds totaling over $1 million.

Several defendants were also charged with filing false tax returns and making false statements under oath in a bankruptcy proceeding, and a superseding indictment added money laundering to the charges against three defendants.

Four of the defendants lived in Hawaii, while the other two were in Georgia.

The name of the lead defendant in the case, Rosemarie Lastimado-Dradi, sounded familiar, and sent me back to search my files.

It turns out that back in 2018, Rose Dradi and two well-known Hawaiian sovereignty proponents were accused by the state Office of Consumer Protection of committing mortgage rescue fraud through a scheme “targeting homeowners desperate to save their homes from foreclosure.”

Here’s what I wrote about that case in a May 2019 blog post:

In a series of legal filings in both state and federal court since the beginning of 2018, the consumer protection agency alleges the scheme involves David Keanu Sai, an activist scholar who has vigorously promoted his own theory that the illegal overthrow of the Hawaiian Kingdom invalidates subsequent laws and land titles; attorney Dexter Kaiama, who has defended a number of sovereignty activists with arguments based on Sai’s theory; and Rose Dradi, a former Kapolei resident.

In court filings, Sai and Kaiama have strongly denied doing anything illegal. Dradi could not be located and has not responded to the allegations.

The agency alleges homeowners facing imminent or threatened foreclosure were told, both explicitly and implicitly, that a legal defense based on Sai’s sovereignty beliefs would result in the foreclosures actions being dismissed and their homes being saved.

The allegations eventually led to a court order permanently barring Kaiamafrom providing “legal services or any other assistance” to any homeowner facing foreclosure.

In addition, OCP said in court filings it had referred the allegations for possible criminal investigation by other authorities.

I have to wonder whether lawyers for the state consumer protection office had any idea they had stumbled into one piece of what prosecutors now allege was a broad criminal conspiracy by Dradi and others.

According to the indictment of Dradi and others, the broad federal investigation in Dradi’s various activities has been ongoing for several years.

DOJ Press Release re Fraud Charges Against Six Defendants by Ian Lind on Scribd