A former intelligence agency chief was sentenced to a suspended 34-month prison term Thursday for his role in a 2007 investment scam aimed at swindling the pro-Pyongyang group Chongryon out of ownership of its Tokyo headquarters.
The Tokyo District Court said Shigetake Ogata, 75, who headed the Public Security Intelligence Agency between 1993 and 1995, was also responsible for defrauding Chongryon, or the General Association of Korean Residents in Japan, out of ¥484 million while negotiating the ownership transfer.
The court also handed down a suspended three-year prison term to Tadao Mitsui, 75, a former real estate agent the court called the mastermind of the scam.
Both Ogata and Mitsui had denied guilt throughout their trials, which lasted more than a year.
Ogata claimed his proposal to purchase the Chongryon building was intended to save the de facto embassy of North Koreans in Japan. His lawyers pointed out that Chongryon was guaranteed the right to continue using the building even after the transfer of ownership.
On Thursday, presiding Judge Masahiko Hayashi said Ogata bears major responsibility because the fraud could not have succeeded without the involvement of a former intelligence chief.
However, the court said Ogata and Mitsui deserved suspended sentences because they had not intended to run away with the money. The court added that they have returned most of the funds, as well as the ownership rights of the real estate, to Chongryon.
The court said the 2007 scam was an attempt to swindle the group out of the building’s ownership by assuring it of a ¥3.5 billion payment, even though neither Mitsui nor Ogata had such financial means.
At the time, Chongryon was under pressure to sell its headquarters because its properties were about to be seized due to its ¥62.7 billion debt to the government-backed Resolution and Collection Corp.
The group wanted to prevent the building from being put up for auction, and approached Ogata and Mitsui. Chongryon said they struck a deal to buy back the real estate within five years at the original price plus a premium.
Mitsui told Chongryon that before he could pay for the building, he had to pay damages for breach of contract on financial projects he was involved with in China and South Korea, leading Chongryon to pay Mitsui ¥484 million. However, Mitsui did not in fact have any such projects overseas.
Ogata and Mitsui had asked Koji Kawae, a former banker who also participated in the scam, to secure the financial resources by approaching investors. However, Kawae failed to obtain the funds.
The court said the three misled Chongryon by telling the group that payment by an investor could be made after the building’s rights were transferred.
The court has already sentenced Kawae to a suspended two-year prison term in June 2008 for his role in the scam.
The real estate rights were transferred to Harvest, Ogata’s investment advisory firm, in May 2007, without any payment being made. The rights were returned to Chongryon 10 days later.
Ogata’s lawyers said their client would lodge an appeal against Thursday’s decision with the Tokyo High Court.