U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18509 / December 17, 2003
SEC v. J.T. Wallenbrock & Associates, Larry Toshio Osaki, Van Y. Ichinotsubo and Citadel Capital Management Group, Inc., Civil Action No. 02-00808 ER (C.D. Cal. Filed January 29, 2002).
Court Imposes $164,383,744 of Disgorgement, Prejudgment Interest and Civil Penalties Against Defendants in Massive Ponzi Scheme Case
The U.S. Securities and Exchange Commission ("Commission") announced today that on December 10, 2003, The Honorable Edward Rafeedie, Senior Judge for the United States District Court for the Central District of California, issued a final judgment imposing a total of $164,383,744 in disgorgement, prejudgment interest and civil penalties against four defendants in a massive Ponzi scheme that raised over $253 million from over 6,000 investors across 48 states. Judge Rafeedie ruled for the Commission after a hearing on the issue of monetary relief. In his ruling, Judge Rafeedie rejected the argument that defendant Larry T. Osaki ("Osaki") of Upland, California, should not be held jointly and severally liable with the two entity defendants that he controlled, J.T. Wallenbrock & Associates ("Wallenbrock") and Citadel Capital Management Group, Inc. ("Citadel"). The ruling further rejected the argument that defendant Van Y. Ichinotsubo ("Ichinotsubo") of Cerritos, California, a recruiter who significantly assisted Osaki, Wallenbrock and Citadel in the fraudulent scheme, should not have disgorgement ordered against him because he was also an investor who had lost money in the scheme.
The United States District Court for the Central District of California in Los Angeles had previously entered an order on February 28, 2003, permanently enjoining Wallenbrock, a general partnership located in Pasadena, California, Osaki, Ichinotsubo and Citadel Capital, a Nevada corporation located in Pasadena, California, by consent, from violations of the antifraud, broker-dealer registration and securities registration provisions of the federal securities laws.
Judge Rafeedie ordered defendants Osaki, Wallenbrock and Citadel, jointly and severally, to pay disgorgement of $139,418,278 and prejudgment interest of $24,270,233. Judge Rafeedie further ordered Defendant Ichinotsubo to pay disgorgement of $409,798 plus prejudgment interest of $85,435. Judge Rafeedie additionally ordered Osaki and Ichinotsubo to each pay a third-tier civil penalty of $100,000. The Court ordered that Defendants make the above payments within 30 days of the filing of the Order. For further information, see Lit. Rel. Nos. 17343, 17381, 18011 and 18446.