JTI founder pleads A Honolulu man pleaded guilty in federal court yesterday to charges of taking in more than $1 million in a fraudulent Web site hosting business, but his investors may have a long wait for any relief.
guilty to fraud
Jason Tadao Ibara faces up to
5 years in prison and a fineBy Tim Ruel
truel@starbulletin.comJason Tadao Ibara, 29, faces up to $250,000 in fines and five years in prison in connection with his former company, JTI International, which garnered $1.27 million from more than 100 investors nationwide last year.
Ibara was released yesterday on $50,000 bond, pending his sentencing, which is scheduled for February.
Ibara also faces having to repay the investors. But getting the money back for the investors may not be so simple.
In March, Ibara filed for personal bankruptcy protection in Hawaii, under Chapter 7 liquidation. His largest asset: a Honda CBR 600 sport motorcycle, valued at $9,000, mostly unpaid for. Meanwhile, Ibara faces $879,600 in debts, including $228,000 in back office rent, $136,000 in taxes and $20,000 to his former attorney Richard Thomason. Ibara also had bounced a $1,000 check at the MGM Grand Hotel in Las Vegas. Among Ibara's cosigners were key officers Stacy Naito and Naomi Saito, and his father, Donald Ibara, president of Copiers Hawaii Inc. in Kalihi.
Ibara's firm JTI Foundation also filed for bankruptcy in March, claiming $2,500 in assets, primarily in office supplies. The firm lists the same debts as Ibara.
More information about Ibara's finances is being requested by the Office of the U.S. Trustee and the private trustee appointed to Ibara's case, attorney Mary Lou Woo.
"We're just looking at business transactions that he had in the year prior to the bankruptcy file," said Curtis Ching, an attorney with the U.S. Trustee's Office. The agency monitors federal bankruptcy cases for the Justice Department. Ching declined further comment. Woo also declined comment.
The trustees are trying to find out what happened to the company's money, said Edmund Lee, Ibara's bankruptcy attorney. "They're looking as to how it was spent," Lee said. He referred further questions to Ibara's criminal attorney, former federal public defender Birney Bervar.
Bervar said much of the money went to computer specialists as a business expense, to fix problems with the company's Web sites. Bervar did not know exactly how much was spent but said it "cost a small fortune."
In a hearing yesterday before Magistrate Judge Kevin Chang, Ibara admitted that his company continued to take in several hundred thousand dollars from investors, even after he had learned the firm had no way of tracking its revenues.
JTI sold its investors on a online shopping center based at www.TriTech2000.com, which is now unavailable to Web surfers. The company once operated out of offices in Restaurant Row and the Gentry Pacific Design Center in Honolulu, as well as in Las Vegas and Fresno, Calif.
Ibara spent thousands of dollars to advertise local workshops where he told investors that they would make returns of 10 percent to 20 percent from e-commerce that was to flow to JTI's Web sites, according to court files. The company's Web sites once promoted: "the ultimate Internet home based business." Investors each put in an average of $10,000. The company was supposed to pay a commission based on sales.
A system for tracking purchases never existed, however, meaning JTI had no idea how much revenue could be coming in.
Robin Taibbi, a former employee of JTI, complained to the Federal Bureau of Investigation about the company last year. In a December hearing in federal court, the FBI said Ibara had approached them and admitted committing fraud.
After yesterday's hearing, Taibbi said that JTI was like a cult, where some investors followed Ibara without question. Several of the investors became employees of the company, and found that they were trapped. If they quit, the company would collapse and everyone would lose their money.
In federal court yesterday, Ibara admitted he misrepresented the company to investors, but said he started out with honest intentions. Ibara said he kept the business going longer than he should have, though only to set things straight.
Taibbi disputed this account, saying that Ibara knew all along the company couldn't track revenues or pay back investors. "I think he's getting off easy, said Taibbi, who has since started his own private investigation firm, Island Spirit.
"Everybody's entitled to their view," Bervar said.
The U.S. Attorney's office charged Ibara last month with running a fraudulent operation over state lines, by transferring money to Hawaii National Bank from an account in Nevada.
"We had a primitive system as far as transferring money," Ibara said in court yesterday.