National / Crime & Legal

Ex-head of kimono firm admits to defrauding banks before company failed

Kyodo

The former head of a bankrupt rental kimono firm admitted Friday to defrauding banks to keep his business running, until it suddenly shut its shops before this year’s Coming-of-Age Day celebration in January, causing a furor among female clients who were left without formal attire for the milestone events.

In his first court hearing at the Yokohama District Court, Yoichiro Shinozaki, 56, of now-defunct Harenohi admitted to swindling a combined ¥65 million ($570,000) from two banks in September 2016 by presenting padded earnings reports to cover up the fact that the firm was actually in the red.

Prosecutors said the company’s business had deteriorated by August 2015 and a bank had refused to lend it money, prompting Shinozaki to instruct an accountant to pad the sales figures.

Despite growing debts, Shinozaki thought he could make more profits if he managed to increase the number of Harenohi shops, the prosecutors quoted a former executive of the company as saying.

When Harenohi’s shops shut down right before the Coming-of-Age Day celebration on Jan. 8, some 2,000 customers in Yokohama and in Hachioji in Tokyo were left without festive kimono to wear for their once-in-a-lifetime event, prompting many of them to complain to police.

In Japan, many women wear lavish furisode (long-sleeve) kimono, which often cost several hundred thousand yen if purchased, to mark the day when municipalities hold ceremonies for new 20-year-olds around Coming-of-Age Day, designated as the second Monday in January. It is not uncommon for people to start preparing years in advance.

Many of those whose celebrations were ruined by the fiasco have called for a sincere apology from Shinozaki, who only appeared before the public weeks after his company’s abrupt closure and then left for the United States. He was arrested upon his return to Japan in late June.

“We consider ourselves as having been defrauded even if (Shinozaki) himself denies it,” said a 50-year-old woman who purchased a set of kimono for her daughter from Harenohi for about ¥400,000, but only managed to receive an unfinished kimono after the company shut down.

The company went under with an estimated ¥1.09 billion in debt, of which ¥345 million was owed to customers.

The police initially sought to charge the company with customer fraud but gave up after finding it had been preparing kimono even as its business was deteriorating.

Last month, a Yokohama labor standards office referred Shinozaki and the company to prosecutors for failing to pay some ¥5.1 million in wages to 27 employees for August last year.

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