1 March 2005 – LAWFUEL – The Law News Network – A former Edmonton resident pleaded guilty today to participating in a conspiracy that continued to operate a Ponzi scheme after the fraud was ordered shut down by a United States Court.
Jeremy Carter, 28, who now resides in Winnipeg, pleaded guilty to one count of conspiracy in United States District Court in Los Angeles. By pleading guilty this morning, Carter admitted that he assisted the scheme’s coordinator, Larry Toshio Osaki, in fraudulently collecting more than $250 million from nearly 7,000 victims.
According to an indictment in this case, from at least 1997, and perhaps as early as 1992, until it was ordered shut down in early 2002, Osaki ran the Pasadena-based J.T. Wallenbrock & Associates, which purportedly offered investments in accounts receivable financing, also called “factoring.” Wallenbrock employees told investors that the company purchased the accounts receivable of latex glove manufacturing companies based in Asia and that investments would yield returns of 20 percent every 90 days.
The indictment alleges that Wallenbrock did not purchase any accounts receivable and did not operate a factoring business. Instead, Osaki is accused of using investors’ money to improperly pay the salaries of Wallenbrock’s principals and to finance a venture capital firm that Osaki ran. Documents prepared by a court-appointed receiver indicate that the venture capital firm, Citadel Capital Management, also of Pasadena, directly invested approximately $100 million in start-up businesses. The court-appointed receiver also determined that more than $100 million was paid by Wallenbrock to older investors, but these payments were funded by monies deposited by new investors. These Ponzi scheme payments were documented in “Larry’s Black Books,” which were found in Wallenbrock’s offices in 2002 by the court-appointed receiver.
In 2002, the SEC filed a civil action that alleged Wallenbrock and Citadel were part of an illegal securities fraud. The SEC obtained a preliminary injunction that barred Osaki and others from running the companies. The court also appointed a receiver to oversee Wallenbrock and Citadel assets. In 2003, the injunction became permanent. (See an SEC press release at: )
Contrary to the injunction issued by the federal court, Osaki, with the help of co-defendant Michael Ritter, Carter and others, allegedly relocated the scams to Canada, Belize and elsewhere. With the help of Ritter’s company based in Edmonton, Canada, the indictment alleges that Osaki continued to run the same investment scam through a new company, Village Capital Trust. Village Capital Trust has offered the same accounts receivable investments as Wallenbrock and allegedly continued to operate as a Ponzi scheme.
The indictment charges Osaki, Ritter, and Marty Munesato with a total of 50 counts of conspiracy, securities fraud, money laundering, criminal contempt and obstruction of justice. If they are convicted of these charges, Osaki and his co-defendants face a potential sentence of life in federal prison. Osaki is currently being held without bond in Los Angeles, and Munesato is free on bond. Ritter is currently facing extradition proceedings in Canada. A trial is this case has been scheduled for May 3.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty.
As a result of today’s guilty plea, Carter faces a maximum sentence of five years in federal prison. Pursuant to a plea agreement with United States prosecutors, Carter is required to waive extradition from Canada and to cooperate with U.S. and Canadian authorities.
This case is the result of an ongoing investigation by IRS-Criminal Investigation Division and the Federal Bureau of Investigation. The United States Securities and Exchange Commission provided substantial assistance during the investigation.
CONTACT: Assistant United States Attorney David Willingham
Assistant United States Attorney Jacqueline Chooljian
Release No. 05-038