A bankrupt health food company, suspected of using an illegal pyramid sales scheme, paid 2 billion yen to a health-food maker immediately before going bust, according to investigative sources.
Zenkoku Hachiyo Butsuryu (Hachiyo), based in the town of Chatan, Okinawa Prefecture, is suspected of having violated the investment law.
It made payments on three occasions between Dec. 10 last year and Jan. 9, the sources said Saturday. The alleged recipient was Aliment Industry Co. of the town of Nambu, Yamanashi Prefecture.
The Tokyo District Court declared Hachiyo bankrupt on Jan. 29.
Hachiyo’s bankruptcy administrator filed a lawsuit at the district court demanding Aliment return the money to the administrator. The lawsuit says Hachiyo caused investors harm by prioritized payments to the health food maker prior to bankruptcy.
Hachiyo is suspected of illegally collecting funds under a Ponzi scheme, fraudulently promising investors their money would grow within a certain period.
Such schemes are investment scams in which the money put up by later investors is used to pay off earlier investors. Investments become riskier as the pyramid expands.
Seeking evidence of the scam, police raided the company’s regional headquarters in Tokyo and its group companies in more than 10 prefectures on March 25.
The companies, headed by honorary chairman Osamu Tadokoro, collected over 156 billion yen from about 48,000 investors. It went bankrupt in January with some 49.5 billion yen in debts owed to 40,000 investors, the police said.
Police aim to file fraud charges in the apparent Ponzi scheme. They earlier said former company executives asked people to invest knowing it was a fraud.
Police are questioning Tadokoro, who returned to Japan from abroad on Oct. 26, and other former company executives, on a voluntary basis.
An agent for Aliment, which supplied Hachiyo with health food products, said the payments were for the commodity and were based on a legal contract.
The Aliment agent said the company returned 300 million yen to Hachiyo because it received more than it should have, but that the company has no intention of returning the remaining 1.7 billion yen.
Hachiyo and its group companies lured investors in by saying the investors would act as “agents,” purchasing Hachiyo’s products for about 1.5 million yen per set. The companies would then sell the products on behalf of the agents, who were supposed to receive 3 million yen a year later.
In reality, the companies simply collected funds to pay what they had promised to other investors and to raise more money to continue the scam, police said.
People who introduced investors to Hachiyo would make a profit. If an agent introduced more than 10 new members, he or she would be promoted to a “sales company.” Investors with 10 such sales companies were called “supervising sales companies,” according to the police.
Investors could also become “special” agencies by paying 300,000 yen per set. But the firms stopped making payouts Dec. 28.
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