Los Angeles, California – LAWFUEL – The Law Newswire – An employee of a Pasadena, California firm that was involved in a multi-million dollar Ponzi scheme was sentenced to 36 months in federal prison this morning, followed by three years of supervised release, for his role in defrauding investors.
In a plea agreement filed on March 21, 2005 in United District Court in Los Angeles, Marty Akira Munesato, 50, pleaded guilty to being part of a conspiracy to defraud securities investors in connection with the firm of Village Capital Trust.
Munesato worked as an employee of J.T. Wallenbrock & Associates, an investment company operated by Munesato’s co-defendant, Larry T. Osaki. J.T. Wallenbrock offered investments in what it described as accounts receivable for latex glove manufacturers based in Malaysia and China, telling investors that they would make a profit of 20% every 90 days on their investments.
According to Munesato’s plea agreement, after the Securities and Exchange Commission filed a federal lawsuit and received an order prohibiting Osaki from selling securities in January 2002, Osaki and others planned to set up a new company, Village Capital Trust, and operate it outside of the United States. In March of 2002, Munesato, knowing that the district court proceeding initiated by the SEC in Los Angeles was pending and that the court had ordered the J.T. Wallenbrock business to be shut down and had prohibited Osaki from being involved in the business, and knowing the allegations that Osaki and J.T. Wallenbrock ran a large scale Ponzi scheme that defrauded investors out of hundreds of millions of dollars, agreed to work for Village Capital Trust.
As a part of his duties at Village Capital Trust, Munesato received daily e-mail updates informing him of new deposits from investors in Village Capital Trust and forwarded the e-mails to Osaki. Osaki would then instruct Munesato to send partial Ponzi payments to specified investors in specific amounts. Munesato would then forward the payment instructions to others, who made payments to earlier investors.
In addition to his involvement in orchestrating Ponzi payments to investors, Munesato knew that promotional materials and representations used to solicit new funds from Village Capital Trust investors did not truthfully inform investors about the flow of money and the fact that Village Capital Trust did not use investor funds for the factoring business and that the materials did not reveal that Osaki and other former J.T. Wallenbrock employees controlled Village Capital Trust in direct violation of the district court’s order. Further, Munesato and others took affirmative steps to hide the involvement of Osaki from Village Capital Trust investors and from the SEC.
From its inception in March 2002 through the end of its operations in September 2003, Village Capital Trust took in over $7,000,000 in new funds from investors.
In addition to being sentenced to 36 months in federal prison, United States District Judge Stephen V. Wilson ordered Munesato to pay restitution to victims of the scheme totaling $7.1 million dollars. Judge Wilson ordered Munesato to begin serving his sentence on June 18, 2007.
This investigation was conducted by agents with IRS – Criminal Investigation and the Federal Bureau of Investigation.