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Fullerton Man Held on Suspicion of Bilking Investors

April 26, 2001|BONNIE HARRIS | TIMES STAFF WRITER

A twice-convicted Fullerton man was arrested Wednesday on charges of bilking at least 130 investors out of more than $15 million in a yearlong Ponzi scheme that promised huge returns for trading in offshore letters of credit.

Scott K. Yoshizumi, 39, faces 24 criminal counts of fraud and money laundering in a federal grand jury indictment that was returned Tuesday. He was ordered held without bail Wednesday as a flight risk and an "economic danger" to the community, said Assistant U.S. Atty. Michael Wilner.

Yoshizumi's attorney, Ronald Kaye, a deputy federal public defender, said he could not comment on the case.

According to the indictment, Yoshizumi persuaded customers to turn money over to his company, Concord Capital Inc., to invest in a trading program involving letters of credit and other financial paper from foreign banks. The scheme ran from November 1999 through November 2000.

Yoshizumi told customers that they were making a "safe, lucrative and sophisticated investment" that would give them regular monthly payments of 2% to 4%--or 24% to 48% interest a year, the indictment alleges.

But the trading program was a "fiction made up by defendant Yoshizumi," the indictment states, and he never used the money to purchase or sell any letters of credit.

Instead, it alleges, Yoshizumi operated a Ponzi scheme, paying interest to earlier investors with money from later investors, and used the excess to buy a house in Fullerton, luxury cars and other personal items.

The indictment also accuses him of lying to investors and failing to disclose that he had been convicted twice on federal fraud charges and that four employees had served "significant" prison terms for credit card fraud, armed bank robbery, drug trafficking and money laundering.

Yoshizumi also created and mailed marketing materials and fictitious earnings statements to clients, the indictment alleges.

The majority of investors were from Southern California, Wilner said; some were from other states. Clients contributed $10,000 to $3 million each as an initial investment, Wilner said.

Securities and Exchange Commission officials said Wednesday that they have frozen Yoshizumi's assets and issued a temporary restraining order to try to locate and return investors' money. So far, nearly $1 million in cash has been recovered, as well as the Fullerton home that Yoshizumi had purchased under his girlfriend's name, Wilner said.

"But we're afraid most of the money is gone," he said. "It's probably long gone."

Yoshizumi is scheduled to be arraigned Monday. He is charged with seven counts of securities fraud, seven counts of mail fraud, three counts of wire fraud, six counts of money laundering and one count of criminal forfeiture. If convicted on all counts, Yoshizumi faces a maximum sentence of 240 years in federal prison.

The FBI arrested him without incident at his home on Hermosa Place.

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