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Former chief of scandal-hit Osaka school operator faces another arrest for fraud

Kyodo

The former chief of the school operator embroiled in a scandal involving its discounted purchase of government land faced a new arrest warrant Monday for defrauding subsidies from the Osaka Prefectural Government, investigative sources said.

Yasunori Kagoike, the 64-year-old former head of Moritomo Gakuen, and his 60-year-old wife, Junko, allegedly swindled about ¥92.5 million, the sources said. The couple were indicted Monday for fraudulently obtaining subsidies from the central government.

The couple came into the spotlight earlier this year over the school operator’s purchase of public land in Osaka Prefecture to open an elementary school with ties to Prime Minister Shinzo Abe’s wife, Akie, a plan that has since fizzled.

Abe has denied his or his wife’s involvement in the controversially land deal.

The prosecutors have so far questioned officials in the Finance Ministry’s regional bureau in Osaka who were involved in the negotiations on suspicion that they may have committed a breach of trust by selling the land at an unreasonably cheap price.

Investigations into the Kagoikes have centered on the subsidy fraud, and they were first arrested July 31 for allegedly swindling around ¥56 million in central government subsidies by padding the expenses for building the elementary school.

The latest arrest warrant is based on a prefectural government criminal complaint filed in May that Kagoike fraudulently secured about ¥62 million in subsidies between fiscal 2011 and fiscal 2016 for a kindergarten run by Moritomo Gakuen in the city of Osaka.

Following investigations, prosecutors found that more funds than claimed by the prefectural government had been swindled, according to the sources.

Of the ¥92.5 million allegedly received through fraud, ¥70.56 million was in subsidies between fiscal 2011 and 2015 for accepting children who need special care, and ¥21.98 million was obtained between fiscal 2014 and 2016 through false reports about teachers’ working conditions.

The prosecutors concluded that the funds for students requiring special assistance were not used for that purpose. They also said the Kagoikes have allegedly attempted to cheat the prefectural government out of ¥22.73 million in the same subsidies in fiscal 2016.

Sources said Tuesday that parents of those students have told Osaka prefectural officials that they have not submitted medical certificates necessary to apply for the subsidies to Tsukamoto kindergarten, which is run by Moritomo Gakuen. Since the prefectural government received the medical certificates, investigators suspect the documents may have been forged by the Kagoikes.

According to sources close to the matter, the Kagoikes plan to exercise their right to remain silent.

Staffers at the kindergarten told the prefectural government that the couple had been “fully in charge of accounting and subsidy applications,” while Kagoike told reporters before he was arrested in late July that he had “no intention of defrauding (the government).”

The Osaka Municipal Government has also filed a criminal complaint alleging that Kagoike fraudulently obtained slightly over ¥4.3 million in subsidies it provided to the kindergarten.

Regarding the controversial land deal, Moritomo Gakuen acquired the 8,770-sq.-meter plot in Toyonaka, Osaka Prefecture, in June last year for ¥134 million, roughly 14 percent of its appraised value, following negotiations with the Finance Ministry’s regional bureau in Osaka.