A Ponzi scheme earns Lloyd Y. Kimura 140 months in prison and an $8 million bill
POSTED: 1:30 a.m. HST, Jul 14, 2011
A Maui businessman is going to federal prison for 11 years for running a Ponzi scheme that collected and paid out millions of dollars over nearly 20 years.
A federal judge sentenced Lloyd Y. Kimura, 61, to a 140-month prison term Wednesday for mail and bank fraud and for stealing from his employees' pension benefits plans. U.S. District Judge David Ezra also ordered Kimura to pay $8 million in restitution to about 50 victims, some of whom lost their life savings and children's college funds in the scheme.
Kimura, whose brother is recently retired Hawaii County Prosecutor Jay Kimura, also faces a mandatory 20-year prison term when he is sentenced in state court on Maui next week for securities fraud and filing false reports with a state regulatory agency.
Ezra told Kimura he would have imposed a longer sentence had Kimura not cooperated with the FBI, the state and bankruptcy officials.
"When the jig was up, Mr. Kimura did everything he could to do the right thing," said Philip Lowenthal, Kimura's lawyer.
Kimura said, "I accept the ruling of the court."
He filed for bankruptcy in January last year. The restitution will be paid from whatever the assets the bankruptcy court is able to identify.
Federal Prosecutor Kenneth Sorenson said Kimura has agreed to sell his home and other assets, but Sorenson thinks the victims will collect less than half of what they lost. He said the largest loss by a single investor was $1 million.
Kimura operated the Ponzi scheme under the guise of a loan and finance company.
Prosecutors said Kimura persuaded friends and clients to invest with him or his Maui Industrial Loan and Finance Co. under the false pretense that he was going to use their money to issue high-interest loans to others. In return he promised them 8 percent and 12 percent rates of return.
Instead, Kimura used money from new "investors" to pay off earlier ones and even sent them false financial statements, according to court records.
At no time was Maui Industrial Loan and Finance licensed by the state to accept deposits, prosecutors said.
The mail fraud charges were for the false financial statements Kimura sent his clients. The bank fraud charges were for false statements Kimura made to two banks to obtain lines of credit. Kimura also pleaded guilty to stealing $640,000 from the Lloyd Y. Kimura CPA Inc. Retirement Trust Account and 401 Profit Sharing Plan.
In addition to Maui Industrial and the accounting company, Kimura owned Wailuku Tire Center.