Purchased a cruiser, traveled overseas in luxury… “How to manage the organization” of the suspect who collected 87 billion yen through illegal investments in overseas funds.

Signing a nondisclosure agreement

Even under the countless flashes of the cameras, the tanned man did not change a single expression on his face; in fact, he looked rather regal.

On May 13, the Consumer Affairs and Economy Division of the Tokyo Metropolitan Police Department arrested an information provider, Global Investment Lab (GIL) (Tokyo, Japan), on suspicion of violating the Financial Instruments and Exchange Law (unregistered business) for soliciting investments in overseas financial products, the Sterling House Trust, without registration. The suspects, including Yoji Osaka, 50, a company director and the effective manager of Global Investment Lab (dissolved in August 2012), and six other men and women, were arrested on suspicion of violating the Financial Instruments and Exchange Law (unregistered business).

The suspects are believed to have collected investments of 87 billion yen from 7,300 people over a 10-year period from 2002 to 2012.

The six were directly arrested on suspicion of soliciting investments in overseas financial products from 14 unregistered men and women in their 20s to 60s between May ’18 and around October ’23. They are said to have solicited a total of 540 million yen in investments by claiming that they would ‘guarantee the principal amount and pay a monthly dividend of 12% interest, or 1% of the investment,'” said a reporter from the social media department of a national newspaper.

The Financial Instruments and Exchange Law stipulates that firms trading stocks, foreign exchange margin trading (FX), and other financial instruments must be registered with the government, making unregistered investment solicitations and contracts illegal.

In June 2012, the Securities and Exchange Surveillance Commission filed a complaint with the Tokyo District Court against the company and its three directors, alleging that they solicited overseas financial products without registration. Two years later, they were finally arrested.

The solicitation scheme of the suspects was as follows.

GIL is a paid-membership community that provides investment information and online seminars, and members pay a monthly or annual membership fee to gain access to members-only reports, videos, study groups, and other information. These approximately 1,000 members were in charge of recruiting.

The members told their friends from school and people they met at investment seminars that they had established a paper company overseas in the name of their clients, and were managing their investments in an account in the name of the company,” and skillfully used words such as “guaranteed principal” and “12% dividend” to collect investments. The company also used words such as “guaranteed principal” and “12% dividend” to collect investments.

Dividends were paid from the beginning, but stopped in June 2012. At that time, the company also explained that “all customers were not able to withdraw their funds due to a financial audit of the overseas corporation, but there was no problem. However, there was no problem.

GIL took steps to prevent the illegal activities from becoming public knowledge.

GIL explained that investors did not have to become members, but if they cancelled their membership after less than one year, they would be charged 20% of their investment, and if they cancelled after one year but less than two years, they would be charged 10%. They made it difficult to cancel the contract. At the time of signing the contract, they told the investors that they would be subject to claims for damages if they divulged details about the products, etc., and had them sign a nondisclosure agreement.

The scheme was structured like a pyramid scheme, whereby a certain percentage of success fees were paid to the members who successfully solicited investors, who were also the bosses of the members, The arrested suspects were all at the top of the pyramid. The suspect who reigned at the top of the pyramid is believed to have earned a total of approximately 6.5 billion yen, and he spent a lot of money buying cruisers, holding parties, and spending many days traveling abroad,” said the same former lawyer.

Long prison sentences exceeding 10 years are possible.

The arrest was for violation of the Financial Instruments and Exchange Law (unregistered business), but is there a possibility of additional charges such as fraud in the future? We interviewed Ayao Masaki, representative attorney of the law firm “Your Ace.

The first possible charge is fraud (Article 246, Paragraph 1 of the Penal Code, which carries a statutory penalty of up to 10 years in prison). The crime of fraud is committed when a person deceives another person and causes him or her to deliver property to him or her. In this case, if the company had no intention of paying dividends from the beginning and solicited investment knowing that dividends were unlikely to be paid, it can be said that the crime of fraud may have been committed.

If the investigation confirms that GIL’s series of acts were organized and planned fraud, the crime of organized fraud under the Organized Crime Punishment Law (Article 3, Paragraph 1, Item 13 of the Organized Crime Punishment Law; statutory penalty of one year or more in prison) will be applied, and the penalty will be heavier than the ordinary fraud crime. If it is found that the company collected funds by claiming ‘guaranteed principal’ or ‘guaranteed dividend of 12% interest per annum’ during the solicitation, it would also fall under the violation of the Capital Subscription Law,” he said.

What kind of investigation will be conducted in the future?

“It can be said that the case against the company for violating the Financial Instruments and Exchange Law (unregistered business) is only the beginning of the investigation. According to media reports, there are currently 14 victims and the total amount of damage is estimated to be as much as 540 million yen. The focus will be on whether or not the fraud and organized fraud charges can be established. In addition to clarifying the fact of fraud, how many victims (and how much money) can we build a concrete case against them? The key will be to determine the degree of involvement of the six people arrested and the division of roles, including the distribution of profits, and to prove the “organizational nature” of the fraud.

If a case for fraud is made, how much will the penalty be?

If you are prosecuted only under the Financial Instruments and Exchange Law (unregistered business), you can expect to be imprisoned for two to three years and fined. There is a possibility of a suspended sentence. If the defendant is also prosecuted for fraud or organized fraud, it depends on the number of victims and the amount of damage that was caused by the case, but based on the amount of damage in this case (540 million yen), it is quite possible that the defendant will receive a prison sentence of nearly 10 years. If the organization is found to be organized and the crime is punished as organized fraud, a prison sentence of more than 10 years is a realistic possibility.

We will keep a close eye on the investigation.

Attorney Kenjo Masaki

Representative of Yours Ace Lawyers. He is a member of the Daini Tokyo Bar Association. He regularly appears on BAYFM’s “Yukki’s Can Can do it!” and has made numerous media appearances on news and information programs. channel on YouTube, and provides easy-to-understand explanations of legal and financial matters, as well as legal knowledge you should know on the official You Ace channel, “Slightly Concerned Legal Consultation.