The Mortgage Store, a Maui business that was started by investment adviser George Lindell and sold to his daughter, has filed for bankruptcy, with liabilities of about $14.7 million and assets somewhat less.
The state securities commission has received complaints about the business and said it has an investigation pending, but it would not say more.
Several dozen people, most with Maui addresses, are unsecured creditors. Wailuku bankruptcy attorney Ry Barbin, who is handling the bankruptcy, said a case of this size with all unsecured creditors is unusual.
Lindell and his daughter, Holly Hoaeae, also advertised a next-door business called True Wealth Group. . . Living by Design that offers financial and investment advice.
According to Barbin, investors placed money with The Mortgage Store via promissory notes, with a 7 percent return.
The money was used to buy small residential properties, mostly in Texas but also in Maui, Indiana and Ohio.
When the value of the properties fell to below the mortgage balance, Barbin said, with no chance of regaining equilibrium, Hoaeae decided to liquidate through Chapter 7.
The largest listed creditor is owed less than $700,000. The assets have been placed under a trustee, Dane Field, who will dispose of them and distribute the recovery.
Barbin expects the return to be “substantial,” but lenders are not likely to be made whole.
Papers filed in U.S. Bankruptcy Court in Honolulu show that Hoaeae was compensated by more than $1.6 million in 2008 and 2009, and more than $500,000 so far this year.
Lindell, who has had a mortgage business in Kihei for about three decades, sold his business to his daughter about two years ago and had no role in it since, Barbin said. Hoaeae is president, secretary and treasurer.
Hoaeae could not be reached for comment. She has not asked for personal bankruptcy, and True Wealth Group is not seeking bankruptcy.