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A Japanese Laundry Worth $1 Billion?

He remains a legend in Las Vegas. Flying in from Tokyo on his private DC-9, often accompanied by dozens of his friends, Ken Mizuno would hit the baccarat pits at the glittery Mirage Hotel & Casino, at times dropping $100,000 on a single hand. Local officials estimate that over a three-year period, Mizuno lost as much as $60 million at the tables. The problem was, law-enforcement officials in the U.S. and Japan now believe, the cash wasn't his to spend.

Mizuno himself was arrested in Tokyo last summer and has pleaded not guilty to fraud and tax evasion; his attorney did not return BUSINESS WEEK's telephone calls. But officials on both sides of the Pacific are convinced that the property developer is one of dozens of money-laundering foot soldiers working for Japan's powerful yakuza organized-crime networks. "There's more money-laundering activity by them than drug trafficking" in the U.S., says Jim E. Moody, chief of the Federal Bureau of Investigation's erganized-crime and drug section. In all, other FBI officials estimate, upwards of $1 billion in illicit money was channeled to the U.S. as Japanese mobsters joined in the real estate boom of the 1980s.