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22 March 2005 – LAWFUEL – The Law News Network – A man who continued t…

22 March 2005 – LAWFUEL – The Law News Network – A man who continued to offer bogus investments in accounts receivable “factoring” after being ordered to stop by a federal judge pleaded guilty this morning to a series of fraud and money laundering charges in relation to a scheme that cumulatively collected a quarter billion dollars from nearly 7,000 investors and caused $150 million in losses.

Larry Toshio Osaki, 56, of Upland, pleaded guilty to conspiracy to commit securities fraud, two counts of securities fraud, obstruction of justice and one count of money laundering. Appearing before United States District Judge Stephen V. Wilson in Los Angeles, Osaki acknowledged running a fraudulent scheme through a company called Village Capital Trust. That scheme started at his Pasadena company, J.T. Wallenbrock & Associates, and was continued with the second firm based in Edmonton, Canada.

From at least 1997 until his arrest in October 2003, Osaki offered investments in accounts receivable financing, which is sometimes called factoring. Employees at Wallenbrock, and later at the Canadian-based Village Capital Trust, told investors that their money would be used to purchase the accounts receivable of latex glove manufacturing companies based in Asia and that investments would yield returns of 20 percent every 90 days. However, neither Wallenbrock nor Village Capital Trust purchased any accounts receivable and neither operated a factoring business. Instead, Osaki used investors’ money to improperly pay the salaries for him and his associates and run his own venture capital firm.

In 2002, the United States Securities and Exchange Commission filed a civil lawsuit alleging that Wallenbrock was part of an illegal securities fraud. The SEC obtained a preliminary injunction that barred Osaki and others from running the companies. A federal judge in Los Angeles also appointed a receiver to oversee Wallenbrock. In 2003, the injunction became permanent. However, contrary to the injunction issued by the federal court, Osaki, with the help of co-conspirators, relocated operations to Canada, Belize and elsewhere. With the help of his co-conspirators, Osaki formed a new company off-shore, Village Capital Trust, that offered the same bogus accounts receivable investments as Wallenbrock, and it continued to operate as a Ponzi scheme.

Osaki is scheduled to be sentenced by Judge Wilson on October 25. At sentencing, Osaki faces a statutory maximum sentence of 40 years in federal prison. Osaki has been held without bond since his arrest in October 2003.

A man who worked with Osaki, Marty Munesato, pleaded guilty yesterday to conspiracy and securities fraud. Munesato, a 48-year-old Gardena man, who worked on the computer system at Village Capital Trust and in the collection of investor funds, is scheduled to be sentenced on October 31. Munesato admitted that Village Capital Trust was a Ponzi scheme run by Osaki and a co-conspirator, and that he and others conspired with Osaki to get around a court order to shut down Wallenbrock in order to continue the Ponzi scheme. At sentencing, Munesato faces a maximum possible sentence of 10 years in federal prison.

Three weeks ago, Jeremy Carter, 28, of Winnipeg, Canada, pleaded guilty to one count of conspiracy for helping Osaki collect money from victims. Carter is expected to be sentenced by Judge Wilson later this year, at which time he faces up to five years in prison.

The fourth defendant, Michael Ritter, a 48-year-old Edmonton resident, faces a host of charges contained in a 50-count indictment. The United States is currently seeking Ritter’s extradition from Canada.

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.

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.