OSAKA — Eight shareholders of Sogo Co. filed a lawsuit Friday against the former chairman of the collapsed department store chain and the company’s auditor, seeking some 8 million yen to cover losses from the sharp drop in the firm’s stock price.
The former chief has also been questioned by police over allegations that he tried to hide assets from creditors.
The eight shareholders, from Osaka, Chiba and Hiroshima prefectures, filed the suit with the Osaka District Court against Hiroo Mizushima, 89, and the Tokyo-based auditor Century Ota Showa & Co.
According to the suit, the plaintiffs purchased Sogo shares at prices inflated by the company’s window-dressing of its earnings reports and suffered losses when Sogo’s shares plunged in the wake of the company’s effective bankruptcy in July.
Mizushima concealed loans extended to affiliates of Sogo that had excessive liabilities and did not earmark loan-loss reserves in the company’s financial reports from fiscal 1994, according to the suit.
The auditor endorsed the falsified Sogo accounts without examining them, it said.
The lawsuit is being handled by a group of lawyers headed by Itsuo Nakayama.
The lawyers said they will accept more stockholders as plaintiffs and they also plan to file second and third rounds of suits related to Sogo in the future.
Tokyo police have also questioned Mizushima on suspicion of hiding assets in an attempt to avoid their seizure by creditors after the firm filed for court protection in the summer, investigative sources said.
Mizushima allegedly hid some properties by selling them to a brother-in-law and concealed 150 million yen by withdrawing money from a bank account and canceling an investment trust contract around the time the firm filed for bankruptcy with the Tokyo District Court on July 12.
Mizushima denied that he concealed assets, telling police “the property sale was intended to rescue my brother-in-law because his business had failed,” the sources on Thursday quoted him as saying.
On the 150 million yen, he told police he “withdrew a deposit to cover costs for lawyers,” they said.
Police suspect Mizushima took these actions to prevent creditors from seizing the assets, the sources said. Concealing assets or faking asset sales to avoid seizure by creditors violates the Penal Code.
The sources said Mizushima sold to his 79-year-old brother-in-law about 220 sq. meters of land and a two-story house adjacent to his home in Tokyo’s Setagaya Ward in late June.
The registered ownership was transferred July 18. The sale, estimated at 75 million yen, was financed by a loan from Mizushima’s 83-year-old wife to the brother-in-law, the sources said.
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