Monday, March 2, 2015

Olympus Corp Broker Charged With Hiding Billions In Losses

On February 27, 2015 the SEC formally charged Hajime Sagawa, age 67 and resident of Boca Raton, Florida with a host of violations involving Olympus Corp., including the "cover-up of billions of dollars in losses by Olympus Corp". The losses were incurred from speculative investments. To avoid having to post the losses they were transferred to entities in the Caymans and British Isles. These entities then purchased the bad "speculative investments" from Olympus at their original cost, not market prices, using cash secured with bank loans from Olympus' assets.

After completing the fake sales, Olympus executives had to figure out a way to pay for the bank loans. To do this, the company hired Axes America LLC, a registered financial adviser, partially owned by Sagawa. Sagawa was a registered representative, founding member and minority owner of Axes America, LLC. as well as its president and CEO from 2007 to 2010 -- during this time Sagawa lived in New York, Connecticut and Florida. Olympus then overpaid Axes in advisory fees and expected Axes to transfer the excess to the off-balance sheet entities in the Caymans and British Isles. By doing this, the entities were able to pay back the bank loans.

Established in October of 1919, Olympus Corp is a Japanese corporation that sells medical equipment. The company posted a profit of $273 million in the April-December period. In the mid-1980's, to combat the sharp rise in the Japanese yen, Olympus’s management supplemented income with "zaiteku", a Japanese word for speculative investments. Olympus’ ordinary shares are listed on the Tokyo Stock Exchange at approximately ¥4,305 or $36 (ADR: OCPNY).



 Source: Google 

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The SEC collected $4.1 billion for investors in 2014. For information on how to find out if the SEC reached a settlement for a company you've invested in go to www.TheGAFI.com.