The former president and chief executive of Japanese and US investment firm MRI International has been sentenced to 50 years in prison for his role in a $1.5bn (£1.18bn, €1.34bn) Ponzi scheme.
Edwin Fujinaga was also sentenced to three years of supervised release, given a restitution order in the amount of just over $1.1bn and ordered to forfeit the amount of around $813m.
In November 2018, after a five-week trial in the US, Fujinaga was found guilty of eight counts of mail fraud, nine counts of wire fraud and three counts of money laundering in connection with his Ponzi scheme.
Details of the case
According to evidence presented during the trial, from 2000 until approximately 2013, Fujinaga fraudulently solicited over $1bn in investments in MRI from over 10,000 Japanese victims, who resided in Japan.
The victims would wire their funds from Japan to bank accounts in Las Vegas under Fujinaga’s control.
Fujinaga approved and disseminated marketing materials that promised investors that their funds would only be used for purchasing medical claims and that an escrow agent would ensure that MRI used investor funds for only that purpose.
In truth, Fujinaga spent “less than 2% of investor funds to purchase medical claims and used the vast majority of new investors’ funds to pay off old investors”.
He used the balance of investors’ funds for personal expenses, such as a private jet; a mansion on a Las Vegas golf course; real estate in Beverly Hills, California wine country and Hawaii; and Bentley, McLaren and Bugatti luxury cars.
When the Japanese government revoked MRI’s license to market securities in April 2013, MRI owed its investors more than $1.5bn.
Some victims lost their life savings to the scheme.
Another Ponzi scheme
Elsewhere, the Securities and Exchange Commission (SEC) has filed an emergency action charging Robert Morgan, a New York residential and commercial real estate developer, and two of his entities, Morgan Mezzanine Fund Manager and Morgan Acquisitions with fraud for siphoning and misusing investor funds.
The US watchdog is seeking an asset freeze and other emergency relief.
The SEC’s complaint alleges Morgan financed his development projects in different ways, including through sales of securities directly to more than 200 retail investors, many of whom invested through their retirement accounts.
Morgan told investors that their money would be used to improve multi-family properties, and based on these representations, raised more than $80m.
Instead, as alleged in the complaint, Morgan and his entities diverted investor funds to facilitate Ponzi scheme-like payments to earlier investors.
In addition, the complaint alleges Morgan’s improper use of more than $11m in investor funds to repay an “inflated, fraudulently-obtained loan for an unrelated apartment complex”.
“In seeking this emergency relief, the SEC is acting to protect current and potential future victims of this elaborate scheme by halting Morgan’s fraud, which we allege involves the improper use of more than $25m in investor funds,” said Daniel Michael, chief of the SEC’s division of enforcement’s complex financial instruments unit.
The SEC is requesting an order freezing Morgan’s assets and appointing a temporary receiver over the relevant funds.
The complaint further seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and a permanent receiver over the entities.
