At the time the Securities and Exchange Commission sued the Jacobsons in December 2011, regulators alleged that the duo was running the state's largest financial fraud, with more than $200 million taken in from investors.
But Hashimoto told Jenkins that, even though he had limited his examination to records from 2008 plus six specific investment properties spanning other years, he did not find viable evidence that Management Solutions was dependent on taking money from new investors to pay off initial ones in what is known as a Ponzi scheme.
In fact, Hashimoto said cash flow for 2008 was sufficient to pay obligations and that most of the six specific properties he examined had generated sufficient cash on their own to make a profit..
"I have not seen evidence that showed support that the consolidated entities operated with the characteristics of a Ponzi scheme," he said.
The question of whether the Fountain Green company was such a scheme and, if so, when it began, bears on the amount of funds some investors might have to return and how much is paid out to others. Investors also may propose that they take over the remaining properties and manage them until they are sold. That would save tens of millions of dollars, investors say, and allow them to recoup possibly all of their investment and pay off all creditors
Hashimoto was called to the witness stand to counter the findings of Gerald Fujimoto, a Deloitte accountant employed by attorney John Beckstead, who was appointed as receiver of Management Solutions and related entities after the SEC lawsuit was filed.
Fujimoto testified Tuesday that there was extensive mingling of funds from investors and that a pool of money was used to pay investors no matter whether the specific project in which they had invested made a profit.
The receiver's attorney, Brent Johnson, also pointed out that the Jacobsons had taken substantial fees and had engaged in insider deals on some projects that made them appear profitable.
The hearing continues on Thursday with final arguments.
The Jacobsons have reached settlements with the SEC in which they agreed to be liable to repay millions of dollars in profits.