The Securities and Exchange Commission said it has uncovered an "extensive and egregious" Ponzi scheme run by a Las Vegas executive who raised more than $800 million from thousands of investors, mainly from Japan, over nearly 15 years.
A federal judge this month imposed an asset freeze requested by the SEC against the defendants Edwin Fujinaga and his firm MRI International Ltd, court papers show.
The regulator said Fujinaga, 66, and MRI promised to buy accounts receivable from U.S. medical providers at a discount, try to recover the full value from insurers, and give investors profits of 6 percent to 10.3 percent.
Instead, the SEC said Fujinaga ran a "classic Ponzi scheme" by using new and reinvested money, a total of $601 million from January 2009 to March 2013, to repay earlier investors.
The SEC said he also spent investor funds on luxury cars, credit card bills, alimony and child support, and owns homes in Las Vegas; Beverly Hills, California; and Hawaii.
According to the SEC, the scheme began in October 1998 and is ongoing. It said more than 8,000 people invested in MRI, either in U.S. dollars or Japanese yen, and the firm's investments totaled $813 million last year.
"Fujinaga deceived and exploited his Japanese investors into believing that they were buying safe investments with a steady return," George Canellos, co-director of the SEC enforcement division, said in a statement on Thursday. "Instead, Fujinaga operated a Ponzi scheme on an enormous scale that financed his own extravagant lifestyle."
The regulator alleged that Fujinaga also fired an assistant who had tried to stop the document shredding company Shred-It from picking up boxes of documents from MRI, after the SEC had in March ordered MRI not to throw documents out.
Lawyers for the defendants did not immediately respond to several requests for comment.
The complaint was filed under seal on September 11 and made public on Wednesday. U.S. District Judge James Mahan in Los Vegas imposed the asset freeze.
The SEC is seeking to recover alleged ill-gotten gains, impose civil fines, and obtain other relief.
It coordinated its probe with the Financial Services Agency of Japan and the Japanese Securities and Exchange Surveillance Commission, the latter of which in April also recommended discipline against MRI, court papers show.
The case is SEC v. Fujinaga et al, U.S. District Court, District of Nevada, No. 13-01658.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)