Court Declares Scandal-Tainted Kinmirai Tsuushin Bankrupt

Wednesday, December 20, 2006

Court Declares Scandal-Tainted Kinmirai Tsuushin Bankrupt

TOKYO (Kyodo)–The Tokyo District Court on Wednesday declared both Kinmirai Tsuushin Inc. and its president, Masaru Ishii, bankrupt after the firm, which claimed to provide Internet telephony services, came under investigation on suspicion of defrauding investors.

The court appointed lawyer Ginjiro Suzuki as administrator to supervise the bankruptcy procedures. The amount of debts left behind by Kinmirai Tsuushin is unknown.

The administrator will hold a meeting on May 30 at the courthouse to brief creditors on the current state of the company’s remaining assets.

Kinmirai Tsuushin is suspected of defrauding some 3,000 individual and corporate investors of 40 billion yen by promising to pay lucrative dividends on the basis of its nonexistent Internet telephony operations.

The Metropolitan Police Department began questioning former Kinmirai Tsuushin executives earlier this week over the alleged fraud, investigative sources said. Ishii is now abroad, they said.

On Dec. 7, a real estate company, one of the 3,000 investors, asked the court to declare Kinmirai Tsuushin bankrupt. The real estate company had invested 55 million yen in response to Kinmirai Tsuushin’s solicitation of investments.

Lawyer Masaki Kito, chief of a group of lawyers representing Kinmirai Tsuushin investors mainly from the Tokyo area, told reporters the group has received letters from some 500 investors in which they asked the lawyers to represent them against the company.

Kito said other groups of lawyers are also being organized to represent victims of the firm’s alleged fraud in districts other than Tokyo.

”The court decision is appropriate and, for the investors victimized by the firm’s systematic fraudulent activities, it is only the starting point for them to recover their losses,” he said.

”We will provide utmost cooperation to the administrator and make efforts to speedily recover the assets that are threatening to be dissipated and lost, so we can make sure that dividends be returned to victimized people,” Kito said.

On Dec. 4, MPD investigators raided the firm’s Tokyo-based head office and other locations on suspicion the company swindled investors of money on the basis of fraudulent promises of fat returns on investments.

Internal Affairs and Communications Ministry investigators on Nov. 27 raided the head office, finding that the firm effectively has not provided any telecommunications services.