Police arrested a gangster and an accomplice Saturday for allegedly lending money at exorbitant interest rates.

Police suspect that several crime syndicates affiliated with a major Japanese gangster organization are operating a network of underground loan shark services.

The suspects are Kenichi Fukuda, 23, who runs Arms, a money lending company in Tokyo’s Shinjuku Ward, and Koji Suzuki, 24, an Arms employee. Fukuda is affiliated with the Yamaguchi-gumi, one of Japan’s largest gangster organizations. Police said the organization is effectively behind illegal loans operations.

Fukuda, a resident of Tokyo, and Suzuki, whose address is unknown, are suspected of violating the investment law. It is still unclear whether Suzuki is a gangster, according to police.

According to police, Fukuda allegedly conspired with Suzuki to lend about 780,000 yen to seven people on 32 occasions between June and September last year. They are said to have received interest of about 987,000 yen — far above the legal interest limit.

One of the seven was a 55-year-old unemployed man from Hiroshima Prefecture, the police said.

Police have discovered that Fukuda and other loan sharks exchange information and advertise their services by direct mail to heavily-indebted people who cannot borrow from legitimate credit companies.

They lend money at extremely high interest rates and turn a huge profit in a short period of time, said the police.

There are thought to be several thousand underground loan sharks in Tokyo alone, the police said, adding that more than 1,000 of them are believed to work under the umbrella of crime syndicates affiliated with the Yamaguchi-gumi.

The profits from illegal lending activities are said to a major source of funds for the crime syndicates.

Typical underground lenders provide loans of tens of thousands of yen to heavily indebted consumers, sometimes charging more than 100 times the legal daily limit of 0.08 percent in interest.

The lenders often resort to verbal and other forms of abuse to collect loans from borrowers who have difficulty making repayments.

The Metropolitan Police Department has set up a task force with the police departments of Aichi, Hiroshima and Fukushima prefectures to investigate the extent of the crime syndicates’ involvement in illegal loans.

According to MPD officials, a September 2002 investigation into an underground moneylender in Tokyo’s Toshima Ward led to the arrest of a gangster in November on suspicion of running an illegal lending business. The 33-year-old suspect had been head of a group affiliated with the Yamaguchi-gumi.

Material confiscated in connection with the arrest gave rise to the suspicion that several Yamaguchi-gumi affiliates were running underground moneylenders and feeding the funds into a higher-level body in Shizuoka Prefecture, the officials said.

Such illegal lending has only recently become a national issue, as victim-support groups have begun filing complaints with law-enforcement authorities.

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