Three TECOM group companies that prepare medical students for exams were searched by Tokyo prosecutors Wednesday for alleged evasion of income tax, and the president of one of the firms was arrested.
Prosecutors suspect the three Tokyo-based firms have evaded more than 300 million yen in taxes on roughly 950 million yen in hidden income by placing fictitious orders to other group companies or padding bills for textbooks and other teaching materials, sources familiar with the case said.
The three firms -- the group's core firm TECOM Igaku Kenshu Kyokai, publishing arm Igaku Hyoronsha and teaching-video production house TECOM Soft -- reported hardly any profits, according to the sources.
Prosecutors arrested Masayuki Nakayama, 58, president of the core firm, on suspicion of tax evasion.
Nakayama had denied the allegations prior to his arrest, telling reporters that while there may have been accounting errors, there was no intention to evade taxes.
"It may have been an accounting mistake to not draw up estimation sheets or bills, but there has been no listing of bogus transactions," he said. "We have been in consultation with the tax office as to the preparation of documents."
The TECOM group is made up of about 20 companies and runs test preparation schools for national license examinations in medicine, dentistry and nursing, as well as medical school entrance exams.
Another TECOM firm was searched in January in connection with the leaking of questions on the national dentistry exam at a private university in Fukushima Prefecture.