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Tag: MRI

  • BULLETIN: $1.5 Billion Ponzi Alleged In Nevada

    breakingnews72BULLETIN: (5th Update 12:54 a.m. EDT July 9 U.S.A.) Three individuals have been indicted on multiple criminal charges in Nevada, with a grand jury alleging they were at the helm of a $1.5 billion Ponzi scheme targeted at Japanese victims. The criminal case follows a civil action filed by the SEC in 2013.

    Charged with eight counts of mail fraud and nine counts of wire fraud were Edwin Fujinaga, 68, of Las Vegas; Junzo Suzuki, 66, of Tokyo; and Paul Suzuki, 36, of Tokyo, the U.S. Department of Justice said. Fujinaga also is charged with three counts of money laundering.

    All of the defendants were associated with a company known as MRI International Inc. (MRI). The FBI led the criminal probe.

    The news may create consternation among cross-border scammers who venture into the United States to hatch fraud schemes.

    “The defendants allegedly preyed on thousands of unsuspecting Japanese victims to enrich themselves by operating a billion-plus dollar Ponzi scheme,” said Assistant Attorney General Leslie R. Caldwell. “This prosecution shows that the Criminal Division will pursue not only those who victimize American citizens, but also those who use the U.S. as a home base to defraud victims abroad.”

    As the PP Blog reported in 2013 (italics added):

    Part of the scam featured “tours” of MRI’s offices in Las Vegas. The alleged scam is evoking images of Bernard Madoff’s colossal Ponzi scheme, in the sense it appears to have gone undetected for years.

    At the same time, the alleged Fujinaga/MRI fraud is reminiscent of the epic Trevor Cook Ponzi scheme in Minnesota, in the sense that investors appear to have been lulled into a false sense of security because the company had a physical presence. It is somewhat common for fraudsters to tout a brick-and-mortar presence as “proof” no fraud scheme is occurring, even though case after case has demonstrated that the frauds may be buried deep inside an enterprise that at first glance appears to be legitimate.

    “These defendants are accused of using a Nevada corporation to conduct their $1.5 billion fraud scheme and falsely telling thousands of overseas victims that their investments would be safely held and managed by an independent, third-party escrow agent in Nevada,” said U.S. Attorney Daniel G. Bogden of the District of Nevada  “Fraudulent ruses and schemes perpetrated by Nevadans using Nevada corporations and entities will continue to be addressed by this office.”

    From a statement by the Justice Department (italics added):

    MRI purportedly specialized in “factoring,” whereby the company purchased accounts receivable from medical providers at a discount, and then attempted to recover the entire amount, or at least more than the discounted amount, from the debtor.

    According to allegations in the indictment, from at least 2009 to 2013, Fujinaga and the Suzukis fraudulently solicited investments from thousands of Japanese residents, and MRI currently owes investors over $1.5 billion.  Specifically, the indictment alleges that Fujinaga and the Suzukis promised investors a series of interest payments that would accrue over the life of the investment and that would be paid out along with the face value of the investment at the conclusion of the investments’ duration.  The defendants allegedly solicited investments by, among other things, promising investors that their investments would be used only for the purchase of medical accounts receivable (MARS) and by representing that investors funds would be managed and safeguarded by an independent third-party escrow company.

    The indictment further alleges that MRI operated as a Ponzi scheme, wherein the defendants used new investors’ money to pay prior investors’ maturing investments.  According to the indictment, the defendants also allegedly used investors’ funds for purposes other than the purchase of MARS, including paying themselves sales commissions, subsidizing gambling habits, funding personal travel by private jet, and other personal expenses.

    In January 2015, the SEC said a final judgment from its 2013 civil case “requires Fujinaga and MRI to pay more than $580 million.”

  • Affinity Fraud Cases In New York And California Fleece Investors Of $35 Million, SEC Says; Ordained Minister Charged In New York Scheme Targeting Elderly Parishioners

    Eight people have been charged in unrelated affinity-fraud cases in New York and California that bilked investors out of $35 million, the SEC said.

    In the New York case, seven members of a Queens church were charged, including a minister. The scheme targeted “mostly elderly” members of the church, fleecing them of $12 million, the SEC said.

    The California case resulted in charges against a woman who coupled affinity fraud with a Ponzi scheme to fleece investors of $23 million, the SEC said. The scheme targeted members of the Hispanic-American community.

    Charged in New York were Isaac I. Ovid, 28, an ordained minister in the church and a citizen and resident of Trinidad & Tobago; Aaron Riddle, 34, of Narvon, Pa.; Bob Riddle, 59, the father of Aaron Riddle and a resident of New Holland, Pa.; J. Jonathan Coleman, 40, of Astoria, N.Y.; Stephen Cina, 32, of Westbury, N.Y.; Cory A. Martin, 31,of Westbury, N.Y.; and Timothy Smith, 35, of Ephrata, Pa.

    Also charged in New York were Jadis Capital Inc., Jadis Investments LLC and Logos Multi-Strategy Hedge Fund I LP.

    Charged in California were Clelia A. Flores and Maximum Return Investments Inc. (MRI) of El Segundo.

    “As we allege in our complaint, Flores violated the trust of her own community by falsely promising high returns and no risk,” said Rosalind R. Tyson, director of the SEC’s Los Angeles Regional Office. “When she couldn’t deliver, she resorted to paying off early investors with money from unsuspecting newcomers.”

    Flores misappropriated investors’ funds to pay her personal expenses “and finance a lavish party for MRI to celebrate the company’s alleged financial success,” the SEC said. About 150 investors from seven states were affected by the scheme, which began in late 2006.

    Meanwhile, the defendants in the New York case bought expensive watches and a luxury Bentley automobile with investor funds, the SEC said.

    Robert Khuzami, director of the SEC’s Division of Enforcement, didn’t mince words when describing the New York scheme.

    “Affinity fraud is a particularly sinister scam that exploits investors in close-knit communities,” he said. “The SEC has recently brought enforcement actions against fraudsters who have deceived members of the deaf community, religious groups, and various minority groups. Today’s action is especially egregious, as church leaders targeted their own parishioners and betrayed the sincere trust placed in them.”