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Ichiro Yamamoto, former chairman of Keizai Kakumei Club, which was raided in June 1996 for allegedly swindling investors out of 178 million yen, pleaded not guilty July 16 to charges of fraud before the Tokyo District Court.

“I proclaim my innocence,” the 57-year-old Yamamoto confidently told the court. “I worked so hard I had no holidays.” Reading from a prepared statement, he asserted that Tokyo-based KKC was “a philanthropic enterprise for the elderly.”

Ten other former executives of KKC also stand accused of fraud. Lee Tu Yon, 64, KKC vice chairwoman and Yamamoto’s South Korean wife; and KKC President Shigeru Homa, 57, also pleaded not guilty. Four others owned up to the charges.

Prosectors allege that Yamamoto conspired with the other defendants to swindle 36 people out of 178 million yen through a pyramid-based investment scheme between March and May 1995. The KKC executives allegedly lured people into the complex scheme by pledging high returns, in some cases promising an annual return of 400 percent. Yamamoto told prospective members that their money would be invested in construction of a 28-story building in China, and shares of an international telephone card company, prosecutors said.

Asked by presiding Judge Akira Kanaya whether his talk of various projects was true, he said he might have “over-talked” but added that all the projects were actually going on until police raided the company on suspicion of investment law violations. “(Before the police raid), not one person suffered any losses or complained of losses,” Yamamoto said. Prosecutors said Yamamoto told a member that “KKC makes a profit of 500 million yen a day, about 20 billion yen a month.”

The prosecutors’ charges against the group have only revealed part of the alleged pyramid scheme. Police have said KKC raised more than 35 billion yen from some 12,000 members since it was established in May 1995. About half of the 35 billion yen was used to pay back group members, but about 5.2 billion yen was invested in construction projects overseas, most of which cannot be retrieved, investigators said. The total amount of losses suffered by victims could top 20 billion yen, according to investigators. A court-appointed liquidator of KKC said at the end of last month that about 9,600 depositors have come forward with claims of credits amounting to 20 billion yen. Only 3 billion yen has been seized from the group.

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