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Group scams 70 of Y50 million with phony investment scheme

Date Posted: 2007-08-31

A company promising a 44% return on investments after only 35 days opened in Chatan Town in March, then closed its doors two months later after bilking at least 70 people of Y50 million.

They want their money back, and have turned to Okinawa Prefecture for help. Officials say the Koala Association is being investigated for its failure to repay customers’ investment money. “It’s against the law that 44% interest can even be earned within 35 days,” said a Prefecture investigator. “Nowhere can payments like this high interest be legally found.”

Customers told investigators investments cost ¥50,000, with an immediate ¥5,000 being returned when they brought a new investor to the company. The first of four ¥7,000 payments was promised after 35 days, leading to a ¥72,000 return on the initial ¥50,000 investment.

The company paid customers as promised during its first month, but then reduced the ¥72,000 down to ¥67,000, then quit paying all together. Customers are now clamoring for help from the Prefecture to get their money back.

The company denies any wrongdoing, even as those who charge they were ripped off say they were told “This investment to Nago City’s Enterprise Development makes promotion of product sales in the city.” The investors say the Koala Association assured them “it’s a good investment for you, for Nago City, and for farmers, too.”

Koala Association is a four-person company, legal under Japanese law to be a business association. Officials say such companies can do investments and create one associated company, and that companies can apply for subsidy money from both the prefecture and central governments. The law permits the small and medium size companies to solicit investments, so some of the 70 pitched in ¥8 million and up.

The company bills itself as a material excavation support business, serving as business consultants in product development. They receive ¥138 million from the central government and Okinawa Prefecture to support Nago City’s Industrial Promotion Company.

One of the four owners admits “The system was too much for us, and we couldn’t pay money back,” but another insists “I didn’t tell customers anything about investments. I was delivering products to the office, and I don’t know about any investments. It was done by our president of the company.”

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