The Fukuoka District Court ruled on July 18 that the head of the Kudokai organized crime syndicate, headquartered in the city of Kitakyushu in southern Japan, spend three years in jail and pay 80 million yen in fines for evading some 320 million yen in income taxes.
The court decision is substantial, as it recognized some 810 million yen collected from the syndicate's component groups and others as actual income made by the organization's head. The ruling thus raises expectations that authorities will be able to crack down on the money-collection system of organized criminal syndicates that is so vital to their survival.
The money scheme used to support the operations of these groups, called the "jonokin" in Japanese, is unique to organized crime syndicates. Under the system, groups on the lower rungs of the hierarchical ladder, or others "protected" by these syndicates, pay money to those on higher tiers or to those groups that provide protection. The fund originates from protection money called "mikajime-ryo" that was paid by ordinary businesses such as private companies, restaurants and drinking establishments.
Hundreds of millions of yen are said to pour into the coffers of the organization at the top of a syndicate every year, but the transactions are usually made in cash and difficult to follow, even for law enforcement officials.
Before the latest court decision, such money, collected for the management of crime syndicates that are deemed to be voluntary groups without specific legal or administrative oversight, had been considered to be similar to membership fees -- and therefore not taxable.
However, in this particular case, police seized ledgers that recorded detailed transactions of the money written by the "safe keepers" of the organization. Based on the information, and through consultations with National Tax Agency authorities, investigators uncovered the fact that most of the money was spent by the top members of the syndicate. The court ruling also confirmed that the money was taxable as it was amassed illegally.
According to the ruling, the Kudokai syndicate used a systematic approach to collect funds. The organization mainly collected protection money from construction companies doing work inside its territories, and had fixed kickback rates, such as "3 percent for construction contracts less than 1 billion yen." The practice shows that the syndicate used its intimidating presence to force payment.
In recent years, the Kudokai has resorted to gun violence targeting ordinary citizens and corporate officials as a means of intimidation. It is considered to be a retaliatory response to moves by private businesses to distance themselves from crime syndicates. The police must intensify all-out efforts to squash these heinous organizations.
The police and authorities from the National Tax Agency must strengthen their joint efforts, as they did in the Kudokai investigation to uncover the group's shady monetary transactions, to shed even more light on the dark corners of the money schemes run by other criminal gangs.
Despite the fact that all 47 prefectural governments have introduced gang exclusion ordinances to ban individuals and businesses from providing profits to organized crime syndicates, the money-collection system used by gangs has persisted. Those paying the money should also think twice about doing so. It goes without saying that police must do their best to protect citizens from crime syndicates to dispel people's fears of such underworld organizations.