The state has issued a final determination on an alleged $8.1 million Ponzi scheme, but says to possibly expect more new cases because of the poor economy.

Hawai'i commissioner of securities Tung Chan last week issued a final order against those involved, requiring them to pay back investors and imposing a $1 million fine.

Those involved in the case are Joseph W. Sullivan and Chad S. Morisato, along with their business, The Swiss Group.

The case, originally filed in 2006, is the latest alleged local Ponzi scheme to make headlines this year. Another three-year-old case involving a scam of up to $30 million is going through federal court and two new cases, one involving $4.4 million and another involving $2.2 million, have come to light recently.

Ponzi schemes take their name from 1920s con artist Charles Ponzi and typically involve the promise of huge returns. The swindlers pay returns to early investors with funds gained from subsequent victims.

Most likely these won't be the only cases that surface, because Ponzi schemes frequently fall apart during troubled economic times, Chan said. That's because more and more people try to cash out investments and the perpetrator of the scheme can't keep up with the cash demands.

That's what happened to Bernard Madoff, the New York money manager who had the largest Ponzi scheme in U.S. history unravel in December as investors rushed to cash out. Four Hawai'i residents on Maui and Kaua'i were cheated by Madoff's fraud.

"When everyone is redeeming at the same time, the Ponzi crashes," said Chan. That's occurring more and more in the current economic downturn, she said.

"You're going to see a lot of these Ponzis coming to light."

Chan said that, conversely, some people may be attracted to investments that are in reality Ponzi schemes because they are searching for ways to make up for lost ground in other investments.

"We caution against any deal that looks too good to be true," she said.

The Swiss Group case involved promises of guaranteed high interest rates on commodities, offshore investments and other securities. The state said Morisato and Sullivan used false credentials and misrepresentations to attract investors.

This included Sullivan failing to disclose he was a convicted felon and that the money was going directly into Sullivan's personal checking account.

In a sentencing hearing in U.S. District Court earlier this week, victims of Kaua'i mortgage broker James Lull relayed how they were promised high returns on real estate deals but lost money and in some cases saw their lives shattered. Lull is thought to have swindled as much as $30 million from more than four dozen people.

In February, the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading commission accused local resident Marvin Cooper of bilking deaf investors out of almost $3 million, $1.4 million of which was spent on himself.

The agencies accuse Cooper, chief executive officer of Billion Coupons Inc., of fraud and making unauthorized offers and sales of securities. One of the lawsuits filed against Cooper alleges he sought investors to engage in foreign currency trading and was able to raise $4.4 million from at least 125 investors by promising monthly returns of 15 percent to 25 percent.

The lawsuit alleges Cooper only invested a fraction of the money while using some of it for personal expenditures and other amounts to repay early investors. He also allegedly sent false monthly statements to investors showing big gains on their money.

That same tactic was alleged in a case brought to light last week by Chan's office and the CFTC against Hilo-based WeCorp Inc. and two of its principals, Stuart W. Jones and Payton Lowe.

That scheme attracted $2.2 million from late July 2008 to last week, when its operations were halted by regulators. WeCorp allegedly promised big returns in foreign exchange trading to eight Hawai'i investors who invested $337,500 with the firm. Another $1.92 million was invested by eight investors on the Mainland.

The state's preliminary cease and desist order against WeCorp, Jones and Lowe allege that they failed to disclose that Jones had a $174,581 judgment for unlawful practices while promoting a nonexisting automated trading system that produced high returns without any risk.

WeCorp used some of the money to pay Jones' personal expenses and the rent of $25,000 a month for a five-bedroom, four-bath Kahala home with a waterfall and swimming pool, leases on luxury cars and a down payment on a home in San Felipe, Mexico, the state alleges.