Scam targeted Black Investors

By. Betty PleasantSpecial to the NNPA from Wave Newspapers LOS ANGELES (NNPA) – The federal Securities and Exchange Commission filed an emergency action recently to stop an ongoing Ponzi scheme that reportedly has already bilked members of several Black churches in Los Angeles out of at least $8 million. U.S. District Judge Robert J. Timlin granted the SEC an emergency temporary restraining order against three Asian-American defendants, halting their solicitation of investors in an alleged fraudulent investment scheme. In its complaint, filed in the U.S. District Court in Riverside, the SEC accused Ohana International Inc., Financial Solutions and Christiano Hashimoto of conducting unregistered offerings of securities in the form of renewable 30-day promissory notes issued by Financial Solutions, which offer investors patently unrealistic returns. The defendants claim they raised $8 million from investors between July 2003 until they were stopped by the SEC Nov. 10, but “their ongoing solicitations of hundreds of potential investors in the African-American community strongly suggest they may have raised millions more,” the SEC complaint said. The commission’s complaint said the defendants appear to be specifically targeting the African-American community to invest in Financial Solutions notes by promoting fraudulent public offerings through some of the black community’s largest churches in Los Angeles. Lisa A. Gok, the SEC’s assistant regional director of enforcement, said members of the mammoth congregations at West Angeles Church of God in Christ, First African Methodist Episcopal Church and Faithful Central Bible Church were among the houses of worship targeted. Gok said the leaders of those churches were not involved in the investment scheme. She said Hashimoto’s sales agents were predominantly black and circulated among the church members to promote the investment scheme. “It was a word-of-mouth operation that spread quickly and widely through the congregations,” Gok said. In June, one of the sales agents reportedly distributed flyers door-to-door in South Los Angeles promoting an unspecified opportunity that could “secure yourself plus your family’s future.” According to the complaint, on Oct. 22, Ohana and Hashimoto hosted a presentation by Financial Solutions at the Ritz-Carlton Hotel in Marina Del Rey for approximately 500 prospective investors, most of whom were African Americans. Attendees at the event were treated to lobster and prime rib dinners, an open bar and the details of a fantastic investment opportunity -the purchase of Financial Solutions notes – that would net them a 20-percent return on their money the first month and 10 percent every month thereafter. The alleged Ponzi schemers told their black “marks” the promised returns would be paid “like clockwork” and that any late return would be paid at the rate of 33 percent per month, the complaint said. The complaint also said that the defendants held another sales presentation regarding Financial Solutions notes to the African-American community in Chicago on Oct. 29. The SEC contends that the defendants’ promised returns were impossible to achieve and that they were actually operating a Ponzi scheme, which is defined as an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks. The SEC charged that the defendants falsely represented to investors that their purchase of Financial Solutions notes provided loans to government contractors, such as financing Gentech Fabrication Inc.’s ongoing contract to manufacture scaffolding for the U.S. Air Force and money to a government contractor to build “invisible walls” for the FBI. Defendant Hashimoto, 44, does business as and identifies himself as president of Financial Solutions, an entity located in Riverside County. Hashimoto is also identified as the president of Ohana International Inc. Defendant Financial Solutions, which calls itself “a comprehensive financial services firm” on its Web site, is described as a division of Ohana International Inc., a Nevada corporation located in Riverside. Ohana was incorporated in July and Hashimoto is its president. SEC officials said none of these entities are registered with the commission and no registration statement has been filed with the commission with respect to the offering of Financial Solutions notes. Ohana sponsored Financial Solutions’ presentation at the Ritz-Carlton Hotel to which invitees were lured by promises that boxer Mike Tyson, Laker great and entrepreneur Magic Johnson and other celebrities would be in attendance. Gok said neither Tyson nor Johnson had any involvement with the defendants or their activities. Gok said Johnson did not attend the presentation dinner, but Tyson did. “He probably was there to earn an appearance fee,” Gok said. Judge Timlin not only issued a temporary restraining order against the defendants, he froze their assets, ordered accountings from them, prohibited the destruction of documents, expedited discovery and appointed a temporary receiver over Ohana and Financial Solutions. Gok said the commission will seek a preliminary injunction and the appointment of a permanent receiver at a hearing tomorrow. In addition to the interim relief already granted by the court, Gok said the commission seeks a final judgment against the defendants enjoining them from future violations of some 31 securities registration, broker-dealer registration and anti-fraud laws, ordering them to disgorge all ill-gotten gains and assessing civil penalties.