OSAKA -- Former Daiwa Toshi Kanzai President Hiroshi Toyonaga pleaded not guilty Monday to defrauding clients out of 2.9 billion yen through sales of securities by the failed mortgage-backed securities broker that were later found to be worthless.
"I have never, ever cheated people," Toyonaga, 65, claimed in the first session of his fraud trial before the Osaka District Court. "I'm confident that I'll be found innocent."
Toyonaga, Hiromi Ogura, a 67-year-old former board member, and five others are accused of swindling clients out of 2.9 billion yen between November 1999 and early April 2001 by misrepresenting financial products offered by the firm's affiliates.
Investigators suspect the fraud caused a total of 110 billion yen in damages to some 17,000 people, mostly elderly, across Japan in one of the worst postwar fraud schemes involving individual investors.
Toyonaga and the others stand accused of defrauding clients by selling mortgage-backed securities and a financial product developed by the firm's affiliate.
They told the clients the products were very safe and promised a high return on investment even though the company and its affiliates were effectively bankrupt, according to the indictment.
Daiwa Toshi Kanzai was declared insolvent on April 16, 2001. According to Financial Services Agency sources, the firm is believed to have a negative net worth of some 5 billion yen.
The firm had 10 subsidiaries and affiliates, including golf course operators and real-estate brokers, with a total workforce of about 600. Its proceeds from selling securities backed by mortgages on group assets were chiefly invested in group companies.