Tax official arrested over pandemic relief fraud
"It's like something out of a movie." This Twitter comment encapsulated the surprise felt by many on hearing the news.
The seven suspects, all in their 20s, are charged with falsely claiming to be business owners whose revenues had plunged due to the pandemic. They applied for the subsidies in 2020.
Investigators say the group also recruited young people to apply for the funds. Records from the Line messaging app show the suspects telling high school and university students how to submit false applications. One of those arrested has admitted to instructing about 200 people on how to defraud the program.
The group is believed to have invested the subsidies in crypto assets. Investigators say the suspects convinced the young people to take part in the scheme by saying it would double their money.
Process designed to be easy
The government introduced the subsidy program to provide relief to businesses affected by the pandemic, offering up to 7,500 dollars for sole proprietors. The application process is quick and easy, to ensure swift payment.
Business owners typically receive the money about two weeks after submitting the necessary documents through their smartphones. Government officials say they approve most cases without contacting the applicant.
Highly organized group
Investigative sources say the suspects worked as a highly organized group, taking advantage of the simplified application process to maximize their earnings. Each member had a defined role, including recruiting applicants and explaining how the subsidy program worked. Police say the tax official was in charge of forging documents. A 31-year-old man believed to have been the ringleader fled to Dubai earlier this year.
Man on the inside
Former prosecutor Uehara Mikio says the tax official was crucial to the operation because the credibility of his position helped attract applicants.
"He abused his job and knowledge to defraud the government," Uehara says. "He involved young people in his crime. It is a truly malicious act."
Investigators have uncovered more than 3,600 instances of people illegally receiving money from the subsidy program as of April 30. The total amount just from cases being pursued in court is nearly 3.2 billion yen, or about 24 million dollars.
The government has received some money back, with people returning about 16.6 billion yen, or about 124 million dollars, in misappropriated funds.
Officials are calling on those who illegally received subsidies to turn themselves in, saying they will not impose penalties on people who voluntarily return the money.