A Tokyo-based group of real estate companies has swindled nearly 4 billion yen in real estate mortgages from 10 banking institutions — including some major commercial banks — over a period of about four years, according to industry sources.
The sources said 31 real estate companies acting as property purchasers were involved in the scam.
According to internal documents compiled in mid-February by financial institutions, the real estate developers had brokered 320 mortgage applications.
The amount of loans brokered totaled 9.71 billion yen. The 10 financial institutions are believed to have suffered nearly 4 billion yen in damages, the sources said.
The 31 real estate firms were active in the alleged scam for about 41/2 years until around November.
Tokyo police have been conducting investigations into the transactions.
The 10 banking institutions that provided the mortgages are Dai-Ichi Kangyo Bank, Fuji Bank, Bank of Tokyo-Mitsubishi, Sanwa Bank, Asahi Bank, Tokai Bank, Yasuda Trust & Banking Co., Tokyo Tomin Bank and two government-backed firms — Housing Loan Corp. and Tokyo Rodo Kinko.
Dai-Ichi handled the largest number of mortgages, a total of 86, worth 2.55 billion yen, followed by Fuji with 76 deals valued at 2.55 billion yen, Tokyo-Mitsubishi with 42 cases at 1.2 billion yen and Housing Loan Corp. with 42 cases at 930 million yen.
A source at a commercial bank said that of all the mortgages brokered by the 31 developers during the period, nearly 4 billion yen are in arrears or are causing some other kind of damage to the financial institutions. Such damage is also expected to increase.
The developers are suspected of having tricked the financial institutions into lending money by disguising the mortgage applicants as executives of fictitious firms, and falsifying documents certifying annual wages and tax receipts, industry sources said.
The banking industry’s confidential mortgage system registers the names of customers using hiragana rather than kanji. Knowing this, the developers had borrowers take out multiple loans by using different pronunciations of the Chinese characters in their names, according to the sources.
They also used authentic resident registration and personal seal certificates needed for loan screening but falsified income tax certificates, the sources said.
Of the mortgages brokered by the 31 developers, 144, or 45 percent of the total, were handled by Tokyo Kiko, a real estate firm based in Tokyo’s Chiyoda Ward. The company went bankrupt in March last year.
Tokyo Kiko first tapped Dai-Ichi’s Iidabashi branch in Tokyo for dubious housing loans in May 1995, according to the sources. The following month, the bank lent 61 million yen to a woman in Tokyo’s Ota Ward for a mortgage brokered by Tokyo Kiko, they said.
Tokyo Kiko had business relations with Dai-Ichi and Sanwa for the questionable mortgages until 1996, and shifted to Fuji and Tokyo-Mitsubishi in 1997 after Sanwa became suspicious about the loans, the sources said.
Another real estate developer, Ryowa House, based in Tokyo’s Chiyoda Ward, which went bankrupt in September, had brokered shady loans with Dai-Ichi since 1998, they said. Ryowa House also acted as a go-between for loans from Tokyo-Mitsubishi, they said.
Ryowa House was involved in 35 suspicious loans, according to the sources.