National / Crime & Legal

Nine arrested for illegally collecting money for food business Kefir

Kyodo

Nine people were arrested Tuesday on suspicion of illegally collecting money for a food product sales business run by a Tokyo-based mail-order service company that filed for bankruptcy in 2018, police said.

Hideya Kaburaki, 84, former head of the company, Kefir Inc., and the eight others were arrested for allegedly collecting about ¥180 million ($1.64 million) from 19 people between April 2017 and June 2018 in violation of the investment law.

The law prohibits companies other than banks and other licensed entities from collecting deposits. Kaburaki has admitted to the allegation, the police said.

The company and its group firms have not paid back around ¥100 billion to some 30,000 people, according to the bankruptcy administrator.

The police suspect that the company also committed fraud as it is believed to have started using money from investors to pay dividends several years before the bankruptcy.

Kefir, which sold processed food products through a membership website and mail order, is believed to have gathered a total of around ¥210 billion from some 44,000 people between 2000 and 2018, the police said.

Kefir, established in 1992 as a yogurt seller, expanded its business areas over the years to other food products such as maple syrup and dried persimmons.

It used a system under which people were asked to become owners of its food-selling business with minimum investments of tens of thousands of yen. The company promised to return the invested money with interest of about 10 percent by buying back products sold to the person half a year later, according to sources.

But many of its businesses remained sluggish and a system glitch that led to delays in payments prompted many members to terminate contracts, leading to further deterioration of the businesses.

Kefir and its three group companies filed for bankruptcy in September 2018 with combined debt of ¥105.3 billion and 33,000 creditors.

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