Police searched KDDI Corp. offices in Shinjuku Ward, Tokyo, on Wednesday in connection with suspected fraud by Kinmirai Tsuushin Inc., an Internet telephony company that was leasing circuit capacity from the major telecommunications service provider.
Kinmirai Tsuushin, based in Tokyo, solicited investors by promising unrealistically generous returns from their investments, which it claimed were being used to build a proprietary server network. Earlier reports suggested the firm amassed some 40 billion yen from roughly 3,000 investors.
Investigators believe Kinmirai Tsuushin was operating its telephony business using lines leased from KDDI rather than through its server network, as it has claimed.