Island men to
testify in fraud case

Three people accused
of bilking people who needed
business loans face trial
in Louisiana

By Ian Lind
Star-Bulletin

Waianae resident Darren J. Panoke was trying to start a chocolate manufacturing business when he fell victim to a financial scam.

Panoke lost $100,000, but stealing his dream was the cruelest.

Panoke, who spent more than 20 years toiling in Hawaii's candy industry, now works as a production manager in an airport area pizza business instead of running his own company.

Federal prosecutors say the fraud, primarily preying on people seeking business loans, bilked victims in Hawaii and across the country of more than $1 million.

Three people believed to be at the center of the scam were arrested last month and charged with 21 counts of wire fraud and conspiracy, according to a 52-page federal indictment issued in the Western District of Louisiana.

Those facing charges are Robert J. Stevens and his wife, Roberta Lynn Stevens, of Rosepine, La., owners of R.J. Financial Inc., and Jonathan Isaacs, a British citizen who told prospective borrowers that he had access to unspecified European funding sources.

Both Panoke and Robert Paul Bryant, identified in the indictment as another Hawaii victim of the fraud, will testify as prosecution witnesses when the trial begins late this year.

Panoke was just forming his new chocolate company in early 1996 when he was told of an opportunity to get a $1 million business development loan through R.J. Financial, a Louisiana firm that claimed to have access to European funding sources.

Panoke says he was introduced to the company by Dorianne Ho DeMattos, whom he met at a local venture capital seminar. DeMattos is the daughter of well-known Waikiki entertainer Don Ho.

The deal required Panoke to pay an advance fee equal to 10 percent of the requested loan. Panoke made an initial $30,000 payment to DeMattos in early 1996, which was then forwarded to R.J. Financial on his behalf, the indictment alleges. Panoke eventually paid a total of $100,000 to the Louisiana firm, according to the indictment.

"We were told the money would be put in an escrow account and we could pull it out at any time," said Panoke, who was also promised a full refund if the loan failed to come through.

The loan never materialized and Panoke's money vanished.

Bryant lost $19,000 trying to get a $10 million loan for his Great Hawaiian Trading Co. in November 1995, according to the indictment. Bryant declined to discuss details of his loss when contacted by the Star-Bulletin last week.

"People out looking for money to do their dreams are in a vulnerable position because they believe in the dream, and they want to believe that whatever they have to do is going to work," said Courtney Brown of the Hawaii Venture Capital Association.

The indictment alleges that R.J. Financial actually had no access to investment funds, and made all its money from advance fees collected from borrowers like Panoke and Bryant.

After receiving the fees, Isaacs and the Stevenses tried to keep the fraud from being discovered by continually promising that final loan approval was right around the corner, the indictment alleges.

They would offer excuses or explanations of the delays, sometimes imposing new requirements "which in some cases were difficult if not impossible to satisfy," all the while reassuring borrowers that the loans would be available shortly, according to the indictment.

All three defendants communicated directly by phone or fax with would-be borrowers or investors in Hawaii.

DeMattos, who is not accused of any wrongdoing in the indictment, denies she ever advised others to do business with R.J. Financial.

"I was discouraging everyone from doing anything with them.

"As far as I was concerned, they were liars and crooks," DeMattos said.

Howard Parker, assistant U.S. attorney in Lafayette, La., encouraged other victims to report losses to be eligible if restitution is ordered.

Additional losses can be reported by calling Parker at (800) 676-6992.