The former head of the failed Saitama Shogin credit union was sentenced Wednesday to 38 months in prison for causing financial damage to the firm via dubious lending practices.
The Saitama-based credit union mostly served South Korean residents in Japan.
In handing down the ruling on Taigen Gon, 62, presiding Judge Masaki Wakahara of the Saitama District Court said, "Extremely lax and risky loans were made without investigating the business situation, and by ignoring the repeated guidance of the Saitama Prefectural Government."
Prosecutors had demanded a five-year prison term. Gon immediately filed an appeal with a higher court.
The district court found that Gon conspired with a former senior managing director, Hiroshi Takei, 72, and two others to provide loans totaling 2.2 billion yen via several dummy companies to a Tokyo-based housing development cooperative for which Gon's relative served as a senior member.
The cooperative did not issue any repayments.
Gon and the others also caused damage to Saitama Shogin by allowing land in Yokohama that the co-op was using as collateral for a loan to be taken off a lending agreement in 1997, making debt-collection difficult.
Gon pleaded not guilty at his first trial session in April 2000. The court is to rule on Takei and the two others next Tuesday.