Suspect Behind ¥87 Billion Illegal Fund Scheme Allegedly Used Investor Money for Luxury Lifestyle and Sophisticated Organization Building

Signed a confidentiality agreement

Even while being showered with countless flashes from a barrage of cameras, the tanned man showed not a single change in expression, and rather appeared almost composed and dignified.

On May 13, the Metropolitan Police Department’s Life Safety and Economic Crimes Division arrested six people, including Osaka Yoji (50), a company executive and the de facto head of the information provision company “Global Investment Lab” (Tokyo; dissolved in August 2024), on suspicion of violating the Financial Instruments and Exchange Act (unregistered business operations), for soliciting investments into an overseas financial product called “Sterling House Trust” without registration.

Osaka and others are believed to have raised approximately 87 billion yen from about 7,300 investors over roughly a 10-year period from 2014 to 2024.

“The direct charges against the six suspects are that, from around May 2018 to October 2023, they solicited investments in overseas financial products without registration from 14 men and women in their 20s to 60s. They allegedly promised things such as principal guarantee and a 12% annual dividend equivalent to 1% of the invested amount per month, and collected a total of 540 million yen,” said a social affairs reporter for a national newspaper.

Under the Financial Instruments and Exchange Act, companies that trade financial products such as stocks and foreign exchange margin trading (FX) are required to be registered with the government, and unregistered solicitation or transactions are illegal.

Regarding the company, in June 2024, the Securities and Exchange Surveillance Commission filed a petition with the Tokyo District Court seeking an order to prohibit and suspend illegal activities, stating that the company and three executives had conducted unregistered solicitation of overseas financial products. Two years later, arrests were finally made.

The solicitation methods used by Osaka and others were as follows:

“GIL was a paid membership community that provided investment information and online seminars. Once users paid monthly or annual membership fees, they could access exclusive reports, videos, and study sessions. About 1,000 members were responsible for solicitation.

These members told friends from their student days or people they met at investment seminars that we established overseas shell companies under customers’ names and are pooling investment funds under corporate accounts for management, and they skillfully used phrases such as principal guarantee and 12% dividend to raise funds.

Dividends were initially paid, but stopped in June 2024. At that time, they also explained that an overseas corporate audit had been conducted, and all customers are unable to complete withdrawal procedures. However, there is no problem,” said the reporter mentioned above.

GIL also took steps to ensure its illegal activities would not come to light.

“Investors were not required to become members, but they were told that if they canceled within less than one year, 20% of their investment would be charged, and if they canceled between one and two years, 10% would be charged. In this way, rules were created that made cancellation difficult. At the time of signing the contract, they were told that disclosing details about the product would be subject to claims for damages, and they were made to sign a confidentiality agreement.

When investors were acquired, a certain percentage of the success fee was also paid to members who were in the position of superiors to the members who successfully made the solicitation, creating a structure similar to a multi-level marketing scheme, and all of the arrested suspects were in the upper tiers of the membership pyramid. Osaka, who stood at the top of the organization, is believed to have obtained a total of about 6.5 billion yen, and he reportedly lived a lavish lifestyle, including purchasing a cruiser and holding parties, and spending his days traveling abroad,” said the source mentioned above.

Possibility of long-term prison sentences exceeding 10 years

Although the current charges against the suspect Osaka Yoji involve violation of the Financial Instruments and Exchange Act (unregistered business operations), could additional charges such as fraud be added in the future? We spoke with Akiyuki Masaki, representative attorney at the law firm “Your Ace.”

“The first possibility to consider is fraud (Article 246, Paragraph 1 of the Penal Code; statutory penalty: up to 10 years of imprisonment). This applies when a person deceives another and causes them to hand over property. If it is the case that there was no intention from the outset to pay dividends, or that funds were raised while knowing that dividends would not be generated, then fraud charges may be established.

If, as a result of the investigation, GIL’s series of actions is recognized as organized and planned fraud, then the crime of organized fraud under the Organized Crime Punishment Act (Article 3, Paragraph 1, Item 13; statutory penalty: imprisonment for not less than 1 year) could be applied, resulting in heavier penalties than ordinary fraud. If it is found that funds were raised by promoting terms such as principal guarantee and 12% annual dividend guarantee, this could also constitute a violation of the Fund Settlement Act.”

What kind of investigation will be conducted going forward?

“The current case of violation of the Financial Instruments and Exchange Act (unregistered business operations) can be said to be merely the entry point of the investigation. According to reports, there are currently 14 victims and total damages amount to 540 million yen. The focus going forward will be whether fraud or organized fraud charges can be established. In addition to clarifying the fraudulent acts, key points will be how many victims and how much damage can be specifically charged, and how the roles and profit distribution among the six arrested individuals are determined, in order to prove the organizational nature of the scheme.”

What kind of sentence could be imposed if fraud charges are filed?

“If the case is prosecuted only for violation of the Financial Instruments and Exchange Act (unregistered business operations), an imprisonment term of around 2–3 years and a fine can be expected, and a suspended sentence is also possible. However, if fraud or organized fraud charges are also brought, depending on the number of victims and the amount of damages, given the current damage amount of 540 million yen, there is a strong possibility of a sentence close to 10 years. If organizational involvement is recognized and the case is treated as organized fraud, a long-term prison sentence exceeding 10 years becomes a realistic outcome.”

Attention will be paid to the progress of the investigation.