Daiwa Toshi Kanzai execs to do time for fraud

OSAKA — Three former executives of failed securities firm Daiwa Toshi Kanzai were sentenced Thursday to between two and three years in prison for defrauding clients through sales of securities that were worthless.

The Osaka District Court sentenced former board member Hiromi Ogura, 67, to three years; Masahiro Adachi, 60, former president of an affiliated company, to two years; and Kazuyoshi Nakamura, 61, also a former board member, to two years in prison, suspended for five years.

Prosecutors had demanded a four-year prison term for Ogura, 2 1/2 years for Adachi and two years for Nakamura.

All three had pleaded guilty to the charges.

The trio and four others, including Hiroshi Toyonaga, 66, former Daiwa Toshi Kanzai president, are accused of swindling clients out of 2.9 billion yen between November 1999 and early April 2001 by misrepresenting financial products offered by the firm’s affiliates.

Investigators suspect the fraudulent scheme caused a total of 110 billion yen in losses to some 17,000 people across the country, mostly elderly, in one of the worst postwar fraud cases involving individual investors.

According to the ruling, Toyonaga and others defrauded clients by selling mortgage-backed securities and a financial product developed by an affiliated company.

They told clients the products were safe and promised a high return on investment even though the company and its affiliates were virtually bankrupt.

Daiwa Toshi Kanzai was declared insolvent April 16, 2001. Sources with the Financial Services Agency said the firm was believed to have a negative net worth of around 5 billion yen. The firm had 10 subsidiaries and affiliates, including golf-course operators and real-estate brokers, with a total workforce of about 600. Its proceeds from selling securities were chiefly invested in group companies.