The founder of an investment group pleaded not guilty Monday to swindling individuals out of more than 1 billion yen through a bogus investment scheme promising high dividends.
Genta Ogami, the 40-year-old founder of the Tokyo-based G.O. Group of investment firms, is accused together with the group’s four other executives of organized fraud, defrauding a total of 1.34 billion yen from 135 investors throughout Japan between 1997 and 2002.
When the other four executives — Fujinori Tada, Eiichi Saka, Yukinari Suzuki and Kiyoshi Haneda — fully admitted to the charges in the day’s court proceedings, presiding Judge Koichi Ideta decided to try them separately to Ogami.
In his statement, Ogami stressed that the investors must have been aware that they would gain profits only if their forecast of the sales of products they chose in the group’s mail-order list was correct.
“The only reason we could no longer repay the investors was because of the media ruckus that prompted investors to pull out their money,” he said.
The Tokyo District Court declared Ogami and five G.O. companies bankrupt in April.
“I feel very bad toward the investors, who are as important as family to me. Once I am freed, I will definitely repay them. I ask for a careful judgment,” Ogami told the court in a tearful voice.
According to prosecutors, Ogami and the G.O. Group officials persuaded potential investors to fund the advertising of the group’s mail-order sales service in newspapers and on television, promising high dividends in proportion to the sales of the products.
Investors received a catalog of merchandise every month and selected products they thought would sell. They were then asked to pay between 20,000 yen to 50,000 yen to help advertise the products.
Prosecutors said in reality, the G.O. Group put only minimal funds into the mail order business, but sent documents to investors saying that it was making profits that would be later paid to them as dividends, citing fictitious figures.
Ogami and the group members allegedly promised investors they would “never make a loss.” They told the investors, for example, that the invested money would produce a dividend of 12 percent of the original fund in a year, and that the full capital would be returned to them one year later, according to the prosecutors.
But when the repayment came due, investors were informed that their money had been transferred to “an even more profitable scheme,” and the money was never repaid.
The G.O. Group did not turn a profit in any sector of its business, and most of the money invested was used to pay for Ogami’s personal expenses as well as the group’s operational costs, they said.
The group also sent some of the money raised in Japan to start businesses in Indonesia and the Philippines, according to investigators. It purchased Unitrust Development Bank in the Philippines in September 2001.
It collected money from investors in the Philippines and Indonesia under similar schemes.
The five are accused of fraud under the Penal Code and also with organized fraud under a law against organized crime. Under that law, which took effect in February 2000, the maximum penalty is 15 years in prison, compared with 10 years under the Penal Code.
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