U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 18011 / March 3, 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).
The U.S. Securities and Exchange Commission ("Commission") announced today that a federal court in Los Angeles entered an order on February 28, 2003, permanently enjoining Wallenbrock & Associates ("Wallenbrock"), a general partnership located in Pasadena, California, Larry T. Osaki ("Osaki") of Upland, California, Van Y. Ichinotsubo ("Ichinotsubo") of Cerritos, California, and Citadel Capital Management Group ("Citadel"), 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.
In Court filings, the Commission alleges that since at least 1999, the Defendants raised at least $230 million through the offer and sale of unregistered three-month promissory notes promising a 20% return for each three-month period, which were automatically rolled over upon maturity, to at least 1,000 investors throughout the United States. The Complaint alleges that Defendants fraudulently misrepresented to investors that their money would be used to generate profits in Wallenbrock's receivables "factoring" business in which Wallenbrock supposedly purchased discounted receivables of Malaysian latex glove manufacturers. The Commission further alleges in its filings that, in reality:
In consenting to the injunction, the Defendants did not admit or deny the allegations in the Complaint. The Court will later determine what amounts Defendants should be ordered to pay in disgorgement of ill-gotten gains and civil penalties upon further motion and hearing, where the Defendants will be precluded from arguing that they did not violate the federal securities laws.
The Court's Order: (1) permanently enjoins all Defendants from engaging in fraud or the sale of unregistered securities in violation of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; (2) and permanently enjoins Osaki, Ichinotsubo and Citadel from acting as unregistered brokers in violation of Section 15(a) and violating the antifraud provisions of Section 15(c) of the Securities Exchange Act of 1934 and Rule 15c1-2 thereunder.