SEC Freezes $800 Million Ponzi Scam

LAS VEGAS (CN) - The SEC has frozen the assets of a Las Vegas company and its sole owner, claiming they ran an $800 million Ponzi scam, mostly against people in Japan.

The SEC sued Edwin Yoshihiro Fujinaga and MRI International, in Federal Court. The complaint was filed under seal on Sept. 11 and unsealed Thursday.

Fujinaga, 66, is a U.S. citizen who lives in Las Vegas.

The SEC accuses him of running "an extensive and egregious Ponzi scheme that victimized thousands of investors, depriving many of their entire life savings. From October 1998 through May 2013, MRI received over $800 million from investors."

Fujinaga claimed he could buy medical accounts receivable at a discount from medical providers, and recover the full amounts from insurers. But it was a Ponzi scheme in which he used new money to pay off old investors, the SEC says in the lawsuit.

Fujinaga used a second company he owns - relief defendant CSA Service Center - to buy himself houses in Beverly Hills, Hawaii and Las Vegas, and to pay his alimony, child support, credit card bills and "luxury cars," the SEC says.

"As all Ponzi schemes eventually do, the fraudulent enterprise perpetrated by Fujinaga and MRI collapsed," the SEC says in the complaint. "Since at least 2011, MRI has been in default on the payments it is obligated to pay investors. More than 8,000 people invested in MRI and, as of 2012, MRI's investments totaled approximately $813 million. Notwithstanding MRI's defaults to investors, this is an ongoing Ponzi scheme, in which Fujinaga and MRI have planned to make up their losses by enlisting new investors for the same treatment suffered by existing investors."

The SEC said in a statement that it received an emergency order freezing the defendants' assets. It seeks disgorgement, penalties and an injunction. It claims he started running the scam in 1998.

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