The manager of a mail-order business based in Sendai and six employees have been arrested on suspicion of swindling money from people who had registered to work as agents to deliver advertising fliers, police said Monday.
Kenji Tone, 45, and the six others are suspected of soliciting people to become agents and collecting 300,000 yen to 500,000 yen in contract money per person, but then not paying them their commissions, according to police.
Investigators believe about 9,000 people have been victimized nationwide since Tone began the practice in Sendai around 1996, and the total amount defrauded could reach 4 billion yen, police sources said.
Investigators suspect Tone and the six others bilked three housewives -- in Tokyo and Saitama and Aichi prefectures -- out of about 1.15 million yen between September and October.
Police said the suspects told the housewives they could earn 50,000 yen to 100,000 yen a month simply by distributing the fliers.
Tone has denied committing fraud, they said.
Police said they learned the suspects promised the would-be agents they would be paid commissions ranging from 12 percent to 33 percent if the company got orders from people who saw the fliers, which advertised products sold by the company, including health food. However, in most cases, such commissions were never paid, investigators said.