Ponzi Scheme Targeting International Investors

Ponzi Scheme Targeting International Investors

Las Vegas, NV: The Securities and Exchange Commission (SEC) announced today, in Washington DC, the emergency freezing of the assets of a Las Vegas based company and the sole owner of the business, Edwin Fujinaga for allegedly perpetrating a multimillion dollar Ponzi scheme targeting Japanese investors.

According to the complaint, Fujinaga has been running a Ponzi scheme using his business MRI International to defraud investors since October 1998. Under the scheme MRI and Fujinaga convinced investors, mostly based in Japan, that they were investing in a company that purchased accounts from US medical providers with outstanding balances and collected from insurance companies. Fujinaga falsely represented that he would be purchasing these accounts at a discount, then collecting the entire amount and turning a profit for the company and hence the investors.

“Fujinaga deceived and exploited his Japanese investors into believing that they were buying safe investments with a steady return. Instead, Fujinaga operated a Ponzi scheme on an enormous scale that financed his own extravagant lifestyle.” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement.

Needless to say, the funds from the investors were never used to purchase past due accounts, rather they funded Fujinaga’s extravagant lifestyle and paid for everything from luxury vehicles to credit card debts and even child support and alimony. The investments were also used, in typical Ponzi fashion, to pay the principal and interest due on previous investments.

The complaint was filed under seal in the US District Court of Nevada two weeks ago naming Fujinaga, MCI International, and CSA Service Center LLC as defendants. CSA Service Center is named as a relief defendant for the purpose of recovering any ill-gotten assets stemming from the Ponzi scheme. Fujinaga controls CSA, which is the nominal owner of his three homes; one each in Las Vegas, Los Angeles, and Hawaii. At the SEC’s request,the Honorable James C. Mahan granted the SEC’s request for a temporary restraining order, asset freeze, and other emergency relief against MRI, Fujinaga, and CSA Service Center. The SEC investigation was closely coordinated with the Financial Services Agency of Japan (JFSA) and the Japanese Securities and Exchange Surveillance Commission (SESC). They investigators exchanged documents and other evidence crucial to investigating and building the case against Fujinaga and MCI.

“Cross-border cooperation can successfully halt fraudsters who attempt to use international boundaries to avoid prosecution. The close coordination between the SEC and Japanese regulators was crucial to freezing Fujinaga’s assets and foiling his scheme.” said Gerald W. Hodgkins, Associate Director in the SEC’s Division of Enforcement.

The SEC alleges that Fujinaga hosted Japanese investors at the MCI offices in Las Vegas, where they were given a tour of the facilities and offered the opportunity to invest in either US dollars or Japanese yen. Investors were promised returns on investment ranging from 6% to 10.32% based on the size and length of the investment. Using these tactics MCI, which also has a sale’s office in Tokyo, was able to raise more than $800 million in investments. As an assurance Fujinaga and MCI falsely represented to investors that the funds would be solely used for the purpose of investing in the medical accounts receivable space. In reality Fujinaga illicitly transferred investor funds to MRI’s operating accounts, where it was used to pay for general operating expenses instead of medical accounts.  He also transferred funds to other entities he owned that were not in the business of collecting medical account receivables.  Investor funds also were siphoned to another company owned by Fujinaga called The Factoring Company, which bought Fujinaga’s cars and paid his bills.

The investigation is still ongoing with the further assistance of the JFSA. Meanwhile,the SEC has charged Fujinaga with violations of the anti-fraud provisions of the Federal Securities Laws and is seeking the disgorgement of all ill-gotten gains, financial penalties, and permanent injunctions.

Fraud can occur in any number of ways when savvy con men work hard to create plausible stories that seem to stand the muster of due diligence. Fraudsters are also not afraid to create fake companies to hide their intentions and reach across international borders to carry out their schemes. While the SEC and other international agencies are working hard to prevent these kinds of activities, a wise investor can avoid such situations by only working with qualified leads, ensuring proper due diligence, and being diligent about whom they are doing business with.

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