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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23111 / October 10, 2014

Securities and Exchange Commission v. Edwin Yoshihiro Fujinaga and MRI International, Inc., et al., Civil Action No. 2:13-CV-1658 JCM (CWH) (D. Nev.)

SEC Obtains Summary Judgment Win On Liability in Ponzi Scheme Case

On October 3, 2014, the Honorable James C. Mahan, United States District Judge for the District of Nevada, granted the Securities and Exchange Commission's motion for summary judgment on liability against defendants Edwin Fujinaga and MRI International, Inc. on all charges against them, including violations of the antifraud provisions of the federal securities laws.

In a case originally filed on September 11, 2013, the SEC alleged that Fujinaga and his company, MRI, perpetrated an elaborate Ponzi scheme designed to misappropriate money from investors. The SEC alleged that the defendants raised more than $800 million from thousands of investors living primarily in Japan under the ruse that MRI was using their investments to buy medical accounts receivable from medical providers at a discount to recover their full value from insurance companies. The SEC alleged that the defendants used the investments to pay back earlier investors, and that Fujinaga used investor funds for his own purposes, including to buy property and luxury cars. In granting summary judgment in favor of the SEC, the court found that "Fujinaga had sole control over investment funds, using them for his own personal benefit" and, "[w]hile depleting the pool of collected investments, Fujinaga facilitated a Ponzi scheme funded by new investments."

The court's summary judgment opinion finds that Fujinaga and MRI violated Sections 17(a)(1), (2), and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court has not yet determined the appropriate relief against the defendants, and the litigation is ongoing for remedies purposes. The SEC's case is also continuing against multiple relief defendants, who the SEC alleges received and used investors' funds.

For further information, please see Litigation Release Number 22832 (October 3, 2013) [SEC Obtains Asset Freeze and Other Emergency Relief in Ponzi Scheme Targeting Investors in Japan].

The SEC appreciates the assistance of the Financial Services Agency of Japan and the Securities and Exchange Surveillance Commission of Japan in this matter.

 

http://www.sec.gov/litigation/litreleases/2014/lr23111.htm


Modified: 10/10/2014