SEC Wins $580 Million Ponzi Judgment against MRI International and Edwin Fujinaga

On January 27, 2015, the Securities and Exchange Commission obtained a final judgment against Edwin Fujinaga and MRI International, Inc. The judgment requires Fujinaga and MRI to pay more than $580 million.

The SEC alleged that MRI International and Edwin Fujinaga perpetrated an elaborate Ponzi scheme designed to misappropriate money from investors. The SEC claimed that the MRI International raised money from thousands of investors living primarily in Japan under the premise that MRI was using their funds to buy accounts receivable from medical providers at a discount, and turning those over to collect the full value of the receivables from insurance companies.

The SEC alleged that defendants used the money for other purposes, including financing Edwin Fujinaga’s extravagant lifestyle. In October 2014, the court granted the SEC’s motion for summary judgment on liability against Edwin Fujinaga and MRI International on all charges against them, including the following violations of the antifraud provisions of the federal securities laws: Sections 17(a)(1), (2), and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The final judgment, in conjunction with the summary judgment opinion, sets forth findings that form the basis for the sanctions imposed, including that the “defendants engaged in a deceitful Ponzi scheme over several years,” and that “such conduct manifested a high degree of scienter.” The final judgment finds that the defendants collected hundreds of millions of dollars for purported investments in medical accounts receivable, and that they used these funds to repay earlier investors as well as for their own personal expenses.

The final judgment holds the defendants Edwin Fujinaga and MRI International jointly and severally liable for disgorgement of proceeds in the amount of $442,229,611.70 and for prejudgment interest in the amount of $102,129,752.38. The judgment imposes civil money penalties of $20 million against each defendant. The judgment also provides injunctive relief by permanently enjoining the defendants from further securities violations.

The Law Office of David Liebrader practices exclusively in the field of investment loss recovery. For the past 23 years, we have dedicated our law practice to assisting investors who have been victims of investment fraud via fraudulent and unsuitable investment transactions. During that time we have recovered money for over one thousand individuals, pension plans, trusts and companies. The recoveries we have obtained via judgments, awards and settlements on behalf of our clients exceed $40,000,000.

When investors contact our firm they can expect prompt attention, and a detailed analysis of their issues. Typical claims that we are asked to review involve “unsuitability (where a financial advisor makes investment recommendations that are inconsistent with a customer’s investment objectives), claims for “churning” (where a broker enters into an excessive number of trades for the purpose of generating commissions), claims involving illiquid investments such as private placements (I.e., real estate investment trusts, limited partnerships, equipment leasing and oil and gas drilling programs) as well as claims for violations of state securities laws, which often provide investors remedies like attorney’s fees and interest, if they are successful on the claim.

Since a Supreme Court ruling in the 1980s, most investment related disputes between brokerage firms and their customers have been filed in an arbitration forum hosted by FINRA Dispute Resolution. FINRA, along with the SEC, serves as a securities industry “watchdog” and regulator. Most brokerage firms require their clients to sign binding arbitration agreements, mandating that any disputes between them be arbitrated at FINRA.

Investors pursuing claims at FINRA typically advance claims related to suitability. FINRA rules require that all registered representatives make suitable investment recommendations to their clients. Other claims are based on negligence or breach of fiduciary duty, while another category includes claims based on misrepresentations and fraud. Most claims filed with FINRA are resolved within 15 months, and oftentimes, the cases are resolved via settlement or mediation in under a year.

FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).

If you suspect that you have been the victim of investment fraud, or had a financial advisor recommend unsuitable investments to you, call us today for a free, confidential consultation at (702) 380-3131.