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Bank Official Charged in $45 Million Embezzlement

February 20, 1987

LOS ANGELES (AP) _ A former official of Mitsubishi Bank of California and its Japanese parent was charged Thursday with embezzling nearly $45 million to pay gambling debts and play the stock market, then misapplying nearly $1 billion to cover up the theft.

Prosecutors said they are trying to extradite Hirotsugu Mizuno, 44, from Japan to face a grand jury, despite his company’s reluctance to prosecute.

Bank attorney Carl Bradshaw said the parent company showed a loss of only $130,000 in the case after recovering about $3 million in stock from brokerages with which Mizuno had been doing business.

The California bank suffered no loss, he said.

″While this case is serious enough merely in terms of the amount of money involved, it typifies another serious problem facing business today,″ District Attorney Ira Reiner said.

″When an embezzler is caught, the victim company frequently does not want him prosecuted because to do so raises public and stockholder questions about the corporation’s financial controls,″ Reiner said.

Bradshaw took issue with Reiner’s comments, terming them ″amazing and saddening.″

″Nothing has been refused to Mr. Reiner’s office,″ Bradshaw said. ″We provided a full and complete report, thousands of documents.″

He said the bank hadn’t opposed prosecution of Mizuno, ″but we urged him to prosecute on the right numbers, the $130,000.″

District attorney’s spokesman Al Albergate defended the nearly $45 million figure, saying ″it is embezzlement even if some of the money is returned.″

Reiner’s office filed seven felony counts of grand theft, forgery and misapplication of bank assets against Mizuno, a former senior vice president of the California bank and its Japanese parent, Mitsubishi Bank Ltd. of Japan, the world’s fourth largest.

Between September 1980 and October 1984, Mizuno created more than 135 fraudulent loans and loan renewals totaling $946 million in bank assets to conceal embezzlements of just under $44.9 million, according to the complaint.

The loans were made in the names of actual companies that had no knowledge of the transactions, the complaint said.

This money, the district attorney said, was used to invest in the stock market and pay off about $200,000 in debts from betting on horses.

In early November 1984, Mizuno was ordered to return to Japan by officers of the parent bank. The bank says that Mizuno is no longer an employee and that it doesn’t know his whereabouts, Reiner said.

Mizuno had worked for 14 years with Mitsubishi Bank Ltd. in Japan before being transferred to its California subsidiary in 1979. On Oct. 24, 1984, he was promoted and transferred to the bank’s New York branch as deputy general manager, the complaint said.

Shortly afterward, his replacement in Los Angeles discovered the irregularities.

″Mitsubishi flew a top executive to New York to confront Mizuno, then had Mizuno fly back to Los Angeles where he reconstructed the embezzlement scheme and made a full statement,″ the district attorney said.

Reiner said bank officials initially cooperated with the district attorney but for the past year have refused to help investigators. They declined to turn over a transcript of the alleged confession, Reiner said.

The bank also said the official who took the statement has been transferred back to Japan.

″In every way possible, they urged us not to prosecute,″ Reiner said.

Besides seeking to extradite Mizuno, prosecutors have subpoenaed Mitsubishi’s records for presentation to a grand jury.

If convicted, Mizuno faces up to six year and four months in prison and a $10,000 fine.

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