Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Monday, June 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

Judge Certifies Class in Nevada Ponzi Case

(CN) - A federal judge in Nevada granted class certification to Japanese investors who claim they were duped into investing in a Las Vegas-based firm that was nothing more than a massive Ponzi scheme.

Nine Japanese investors sued MRI International Inc. its founder and officers in federal court on July 5, 2013.

MRI International was founded in Las Vegas and operates a branch office in Tokyo, Japan. It holds itself out as a firm dealing in "medical account receivables" the account receivables that U.S. medical providers hold against insurance providers.

But in their complaint, the plaintiffs said despite assurances that their investments were safe and managed by an independent escrow agent, in reality, "MRI used the investors' money to pay off earlier investors and fund its principals' lavish lifestyles."

In addition, the plaintiffs said, MRI International "misled investors about U.S. regulatory and legal oversight and guarantees; and lied to Japanese regulators who investigated the scam."

The investors also claimed that by the time they filed their lawsuit and asked the court to grant certification of a purported class of 8,700, MRI International had "stopped paying ... its matured obligations" and its Las Vegas headquarters was empty.

U.S. District Judge Howard McKibben granted the sought class certification, finding Shige Takiguchi and the other lead plaintiffs had sufficiently demonstrated that a common class does exist, and that defendant MRI International "makes common defense arguments against individual claims. "

McKibben said the potential plaintiff class is comprised of between 4,000 and 8,000 people, who invested in MRI International between July 5, 2008 and May 1, 2013, and expect a loss of investments through the alleged scheme.

MRI International argued there is no way to prove on a class-wide basis that individual plaintiffs relied on the representations it made to them, but McKibben disagreed.

"Individual issues of reliance are no bar to finding commonality," and MRI International made the same core representations to investors, including in written materials, the judge wrote.

"The sales pitch was thus virtually identical from investor to investor," he said.

MRI International also argued individual plaintiffs do not properly comprise a potential class, that a group of attorneys have filed similar actions in Japan, and if those attorneys prevail in Japan's courts, they are less likely to continue with the case.

But McKibben found the argument "unpersuasive."

He said defendants have substantial assets in the United States, which would be easier to collect, and MRI International's argument "implicitly concedes" the class contains members and non-members to the court actions in Japan.

McKibben also dismissed MRI International's claim that the plaintiff class members lack credibility, and cited as proof 16 of 25 named plaintiffs did not attend or agree to attend depositions.

McKibben said the named plaintiffs have been reduced from 25 to 9, thus rendering MRI International's argument moot.

McKibben certified the class, which consists of all people who bought MRI International securities from July 5, 2008, through May 1, 2013, and were injured by defendants' actions.

He excluded from the class 26 individuals who have existing court actions against MRI International in Japan.

In a related criminal case, federal prosecutors last July charged Edwin Fujinaga, of Las Vegas, and Junzo Suzuki and Paul Suzuki, both of Tokyo, with eight counts of mail fraud and nine counts of wire fraud.

Fujinaga also is charged with three counts of money-laundering.

Fujinaga and the Suzukis owe thousands of investors more than $1.5 billion for money they fraudulently solicited from 2009 to 2013, U.S. Attorney Daniel Bogden said in a statement.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.