Independent Upper House member Tatsuo Tomobe was sentenced to 10 years in prison Thursday for swindling 35 people out of about 665 million yen between 1994 and 1996 in a scam involving his Orange Kyosai bogus mutual aid scheme.

The Tokyo District Court also found Tomobe's 64-year-old wife, Mikiko, Orange Kyosai's managing director, guilty of similar charges and sentenced her to five years.

Prosecutors had demanded that Tomobe, 71, be given a 10-year sentence, and his wife six years.

The couple have denied the charges, and a lawyer for Tomobe indicated that his client would appeal the case to a higher court.

Presiding Judge Masazo Ogura determined that Orange Kyosai was a fraudulent body aimed at cheating people out of their money.

Ogura called Tomobe's act "nasty," adding that the defendant took advantage of people who were looking for an investment that reaped higher yields at a time when most financial institutions offered low interest rates.

Tomobe's criminal liability is the most severe among the accomplices because he took advantage of the public's trust in Diet members, effectively widening the scope of the damages caused by the scam, the judge said.

The court also said Mikiko Tomobe played a key role in the scheme and knew about her husband's wrongdoings because she was in charge of maintaining Orange Kyosai's books.

Although defense lawyers claimed the defendants intended to invest the money they collected, the judge dismissed this argument, saying there was no money left to invest because Tomobe had spent it all.

According to the court, Tomobe established Orange Kyosai in 1988 to support the now-defunct Nenkin political party, which he founded.

The organization in 1992 began selling a financial product named Orange Super, which offered yields of 7 percent, much higher than regular bank interest rates, the court said.

After Tomobe was elected to the Upper House as a member of the old Shinshinto in July 1995, he told officials at Orange Kyosai's branch offices to stress that the fund was trustworthy because the organization was run by a Diet member.

Tomobe and Orange Kyosai officials claimed the money was invested overseas when in fact it was never invested anywhere, the court said.

Orange Kyosai allegedly collected some 9.27 billion yen from more than 2,000 people.

At least 276 million yen was used to pay Tomobe's debts from election campaigns and family expenditures, and for buying his way into the Diet in 1995, the court said.

The organization stopped refunding money to the 35 customers mentioned in the ruling in September 1996 before going bankrupt two months later.

Tomobe left Shinshinto in November 1996, after the scandal broke. The party disbanded at the end of 1997.

Tomobe pleaded not guilty in June 1997 and vowed to repay the depositors their money. He also claimed he did not know that Orange Kyosai officials were making false claims to customers.

He earlier told the court that the bankruptcy was brought on by "police investigations and media reports."

Even after his January 1997 arrest, Tomobe refused to give up his Upper House seat, despite the adoption of a nonbinding resolution by the chamber in April 1997 urging him to do so. It was the first time either of the two houses had passed a resolution demanding a legislator's resignation.

"I would be admitting to the crime if I resign," he said.

Five Orange Kyosai officials, including Tomobe's wife and son, Momoo, were arrested in the scam.

Last month, the Tokyo District Court sentenced two former officials, Noboru Masukawa and Matsunosuke Ishizaki, from three to five years in prison for conspiring with the Tomobe family.

Commenting on Thursday's ruling, Chief Cabinet Secretary Mikio Aoki said it was very regrettable.

Since Tomobe's alleged involvement in the scam was revealed, the chamber has repeatedly urged him to resign but he has refused and has remained a lawmaker, Aoki added.

"We had strongly hoped Tomobe would have resigned before this ruling," the top government spokesman told reporters.

Tomobe, a former life insurance company employee, had been seeking to make bail, filing 13 requests with the court since his arrest in January 1997. All were rejected.

There appears to be no chance that the defrauded investors will get their money back from Tomobe.

Meanwhile, Tomobe still receives some 2.37 million yen a month as his Diet member's allowance and employs two secretaries with public money. He still keeps a room in a public condominium for Diet members.

Since his arrest, his sole political activity has been "answering a questionnaire from a press institution," Tomobe told the court earlier.

The House of Councilors Steering Committee said Thursday it would continue pressuring Tomobe to vacate his Diet seat. But unless Tomobe resigns, he can keep his Diet seat as long as he is appealing his case.

His term as an Upper House member runs through July 2001. Tatsuo Tomobe Mikiko Tomobe