Man Pleads Guilty in $250-million Ponzi Scam

An Upland man accused of continuing to operate a $250-million Ponzi scheme after regulators had him banned from the securities business pleaded guilty Tuesday to fraud, money laundering and other charges.

Larry Toshio Osaki, 56, who has been held without bail since his arrest in October 2003, entered his pleas to five felony counts before U.S. District Judge Stephen Wilson in Los Angeles. Sentencing was scheduled for Oct. 25. Prosecutors said they would seek the maximum sentence of up to 40 years in prison.

“This was a massive scheme, both in terms of the timeframe and the number of victims,� Assistant U.S. Atty. David K. Willingham said.

Authorities accused Osaki of masterminding a fraud that collected $253 million from nearly 7,000 people and used money from later investors to pay earlier investors. Losses totaled about $150 million, the U.S. attorney’s office said.

Beginning in 1997, Osaki directed employees of his Pasadena company, J.T. Wallenbrock & Associates, to promise investors returns of 20% every 90 days, Willingham said.

The funds supposedly financed latex glove manufacturing in Asia, but prosecutors said that Osaki instead used some of the money to improperly pay salaries to himself and to associates and that he lost $100 million on investments made by his own venture capital firm.

The Securities and Exchange Commission persuaded a federal judge in January 2002 to bar Osaki and others from running Wallenbrock and to appoint a receiver for the company. But prosecutors alleged that Osaki and co-conspirators immediately formed a new company, Village Capital Trust, that operated from Canada and Belize and offered the same bogus investments. Osaki’s guilty pleas involved his conduct at Village Capital Trust.

Osaki associate Marty Munesato of Gardena pleaded guilty Monday to conspiracy and fraud, the government said. Another associate, Jeremy Carter of Winnipeg, Canada, pleaded guilty three weeks ago to conspiracy. Two San Gabriel Valley residents, Stewart and Patricia Roy, pleaded guilty in December to obstruction of justice for their roles in the scheme. All are awaiting sentencing, Willingham said.

The government is pursuing extradition of yet another defendant in the case, Michael Ritter of Edmonton, Canada.