Japan Life Co., suspected of engaging in a fraudulent rental business using magnetic health care products, has gone bankrupt, dealing a blow to thousands of mostly elderly people who purchased its products for investment.
Tokyo Shoko Research Ltd., a credit research agency, said Tuesday that Japan Life has effectively gone bust with a debt of ¥240.5 billion.
The size of the debt as of the end of March is believed to be the second largest left by a company involved in fraud targeting consumers, after cattle farm chain Agura Bokujo went bankrupt in 2011 with liabilities totaling ¥430 billion.
Japan Life had been ordered to suspend part of its operations four times over the past year by the Consumer Affairs Agency.
The Tokyo-based company sold magnetic necklaces and other health care items, encouraging buyers to conclude "rental owner" contracts under which it promised to pay a 6 percent annual rental fee — much higher than the razor-thin deposit rates in Japan — to those who bought its products and rented them to others via the company.
According to company and agency documents, 6,855 people, mostly seniors, had signed contracts with Japan Life as of the end of July, with their deposits at the company totaling ¥171.4 billion.
A senior official of the agency described the company's business tactics as "fraudulent," while a team of defense lawyers for the victims is preparing to demand that police build a fraud case against the company.
The average amount of money deposited at the company by contract holders was about ¥18.6 million, with the highest amount at ¥500 million, the agency said.
Around 75 percent of the people who have filed complaints about Japan Life with the agency are aged in their 70s or older, and most of them are women, it said.