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Two other former execs sentenced to seven years; fines total ¥15.6 billion

AIJ’s Asakawa gets 15 years for huge pension fund fraud

by Tomohiro Osaki

Staff Writer

Kazuhiko Asakawa, former president of AIJ Investment Advisors Co., was sentenced Wednesday to 15 years in prison for orchestrating a high-profile fraud case that cost his pension fund clients some ¥24.8 billion.

The Tokyo District Court sentenced his subordinates — former AIJ executive Shigeko Takahashi and Hideaki Nishimura, president of AIJ subsidiary ITM Securities Co. — to seven-year terms. The three defendants were also fined a total of ¥15.6 billion.

The court further ruled that Asakawa must forfeit about ¥570 million of his foreign assets in Hong Kong.

Presiding Judge Akira Ando condemned their organized actions as “brazen-faced” and “extremely malicious” and cited widespread societal repercussions.

Asakawa and Nishimura immediately filed an appeal.

The court found Asakawa guilty of defrauding 17 pension fund clients out of ¥24.8 billion between February 2009 and January 2012. To keep his struggling company afloat, the court said, Asakawa continued to conceal its trading losses and falsely assure investors of high returns in the hope of luring new clients.

The cover-up forced at least 11 of the 17 pension fund clients to consider disbanding, the court said.

“(The defendants) made it look like their business was doing much better than it actually was due to what they touted as ‘stable’ management of entrusted funds,” Ando said. “This act is tantamount to cunningly banking on their clients’ natural pursuit of such stability.”

Asakawa’s business was sinking as early as March 2009. The situation only worsened in the following years. From March 2012 onward, the firm publicly proclaimed that it had net assets of ¥200 billion when in fact it only had ¥25 billion.

Ando blasted this vast discrepancy as outrageous.

When the trial opened last December, Asakawa admitted his guilt, and apologized for defrauding his clients and violating the financial instruments and exchange law.

Then in a last-ditch reversal, he pleaded innocent to the fraud charge in July. Asakawa stressed he had never intended to “cheat” his clients and amass profit for selfish purposes, claiming instead that the coverup was a desperate attempt to recover the company’s losses and live up to his clients’ expectations.

Ando acknowledged that it can’t be fully ruled out that Asakawa was hoping to restore his clients’ losses, but the fact remains that he personally benefited by continuing to receive hefty pay as the CEO the entire time he was forging ahead with the coverup.

“It is therefore reasonable to conclude that Asakawa’s true intention boiled down to keeping his firm afloat at the sacrifice of the victim pension fund clients,” the court said.

Ando likewise slammed Asakawa’s sudden plea reversal in July as demonstrating a lack of repentance.

Long considered Asakawa’s closest ally, Takahashi repeatedly crafted formal documents based on inflated figures supplied by Asakawa, the court said.

Takahashi had claimed innocence, emphasizing she trusted Asakawa so completely that she never dreamed her boss was acting illegally. Ando dismissed her argument as feeble in logic and untrustworthy, pointing out that with her professional background, she should have known what was happening.