Local 'Bernie Madoff' no show in court, dies in crash

Local 'Bernie Madoff' no show in court, dies in crash
SEATTLE -- A Seattle-area man accused of running a Ponzi scheme in Hawaii and conning more than 50 investors out of up to $30 million has died in a car crash.

James William Lull, who failed to show up for his sentencing in court in Hawaii on Thursday, died when his car drove off of a cliff on the same day in Selah, Washington.

Investigators said Lull, 60, was headed west on Interstate 82 when his car went off the road north of the Fred Redmond Bridge, flew through a barbed-wire fence and fell some 200 feet down a canyon wall. Conditions were very windy at the time of the incident, officials said.

Lull, who had been indicted on charges of running a Ponzi scheme and was on trial in Kaua’i, had pleaded guilty to one count of fraud and was facing up to 20 year in prison. On Thursday his attorney said Lull had planned to fly to Hawaii for the sentencing.

“I thought he would have been here,” said federal public defender Peter Wolff in court.

"Bernie Madoff of Kaua’i"

Many of Lull’s victims referred to him as "Bernie Madoff of Kaua’i."

Lull worked as the manager at the Kaua’i branch of U.S. Financial Mortgage Corp. from 1994 to 2006 during which time he conducted what he referred to as his “side-line business.” He told investors he was giving bridge loans to home buyers who did not qualify for a conventional mortgage loan.

To convince his wealthy acquaintances to invest in what he described as low-risk, short-term loans with high interest rates, Lull presented them with loan applications he said home buyers had filled out, his victims said.

But victim Donald Tipaldi said Lull never made the bridge loans and “diverted the money” for personal use, according to bankruptcy papers. Lull admitted to having stolen from his victims, most of whom are Kaua’i residents.

Originally from Kirkland, Lull filed personal bankruptcy in December 2006 with more than $31 million in debt and $6.7 million in assets, which included three estates - two in Kaua’i and one in Idaho, and moved back to the Seattle area.

But Stephen Jones, attorney for the trustee overseeing Lull's bankruptcy case, said the total amount Lull owed was believed to be $50 million, including $1 million to three-time world champion surfer Philip A. "Andy" Irons and his brother, Bruce Irons.

“His (Lull’s) friends, his business partners -- he took them all. Stuff like this in a community this small just crushes people," said the two men’s father, Bill Irons.

Irons added that his sons “pretty much gave up hope" of recovering their investment money.

Hidden assets

Trustee Ronald Kotoshirodo alleged in court documents that Lull, who was not fully cooperating, had told acquaintances that he had hidden assets from victims and investigators.

Last month Lull asked Paul Veldhuis, a creditor in Washington state, not to share details of his finances with federal officials, the documents said.

He allegedly left Veldhuis a phone message that said, “I have property I have not told the government about. I will pay you.”

During a polygraph test in March, Lull showed “deception” when asked whether he was concealing any assets from the bankruptcy court, the polygraph examiner reported.

Lull admitted during a sworn deposition in March that he had not initially disclosed $3 million in assets, which the trustee later discovered. Those assets included diamonds, opals, coins and collectible pool cues, according to court documents.

Prior to his sentencing on Thursday, a judge had allowed Lull to be released on bail after he promised to find assets to repay his victims.

Lull was originally scheduled to be sentenced last month, but the judge delayed the ruling, stating she wanted more time to learn about his cooperation in recovering his victims’ money.

KITV and Honolulu Advertiser contributed to this report.