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Dormant nonprofit groups being used for fraud, prostitution: Mainichi survey

A snapshot of STA's website, which says, "Since STA is a nonprofit group authorized by the Cabinet Office anybody can use it without concern," is seen in this photo taken in November 2018. (Mainichi, image partially modified)

TOKYO -- Inactive nonprofit organizations, which local bodies have failed to properly supervise, are being used for crimes such as fraud and even prostitution, according to a Mainichi Shimbun survey.

In 2013, a government panel of experts released a report warning that such dormant bodies could be "hotbeds for illegal activities." The latest revelations have highlighted the need to review the Act on Promotion of Specified Non-profit Activities since the law, which came into force nearly 20 years ago, cannot deal with the situation.

Tokyo-based STA is among the dormant NPOs being used for crimes. Yoshinori Matsumoto, 51, and Kazue Hasegawa, 54, who effectively own STA, were arrested in June and subsequently indicted on charges of fraud. They were suspected of soliciting heavily indebted people and having them file lawsuits against money brokers demanding the repayment of excessive interest, and then taking the money that was returned, which should have rightfully gone to the debtors.

STA is one of the 2,138 specified nonprofit groups that the Mainichi Shimbun found are dormant in the survey. An individual linked to STA said the organization was operating in a room at an office building near JR Otsuka Station. "A wide variety of people, including those saddled with multiple debts and indebted women working in the adult entertainment industry were coming to the organization's operating base."

STA was founded in 2009 for the purpose of "providing counseling on debts and other purposes."

A man in his 60s living in Tokyo agreed sometime around 2008 to lend his name as a board member of STA at the request of Hasegawa. "We'll launch a charity project. We'll never cause any trouble to you," the man quoted Hasegawa as telling him." The man said he was grateful to Hasegawa for introducing him to a lawyer who successfully helped settle his multiple debts.

"I lent my name to the organization" along with two other people who were in similar situations, the man recalled.

The organization submitted a report to the Tokyo Metropolitan Government every month stating, "Since our activities are suspended now, we did not make any achievements."

In fact, however, STA solicited debtors to consult the organization, offering to extend loans to them or help them get back excessive interest they had paid. STA members phoned those believed to be saddled with multiple debts based on a list, according to the man and another board member.

The Metropolitan Police Department confiscated a list of some 4,000 debtors from STA, according to people linked to the investigation.

The STA's website still says, "Since STA is a nonprofit group authorized by the Cabinet Office anybody can use it without concern." The organization was actually authorized by the Tokyo Metropolitan Government.

"Incorporated nonprofit bodies have a positive image and can easily win trust from the public. Those operating STA probably thought that they could solicit customers by emphasizing its good image as such an organization," the man said.

The metropolitan government ordered STA to rectify its practices, which the regulator described as "extremely inappropriate," and then nullified its authorization of the body in mid-September.

The head of "Ibaraki Jinken Yogo Shienkai" (Ibaraki organization to help protect human rights), an incorporated nonprofit group based in Shimotsuma in the eastern Japan prefecture of Ibaraki was arrested in 2015 on suspicion of prostitution and subsequently handed a suspended prison term.

"I thought the organization was suspicious because young women came in and out of its office at night," a neighbor recalled.

The address and phone number of an adult entertainment establishment the nonprofit group head operated were the same as those of the organization. The association has been dormant since its establishment in 2014. Its regulator, the Shimotsuma Municipal Government, revoked its authorization of the group in September on the grounds that it had not submitted a report on its activities for over three years.

"Kankyo Fukushi Nagato Shien Kyokai" (Nagato association to support the protection of the environment and welfare), an incorporated nonprofit group in Nagato in the western Japan prefecture of Yamaguchi, was stripped of its authorization in October 2004 on the grounds that the organization was under the control of a crime syndicate.

Its president was arrested in 2004 for allegedly conspiring with a yakuza boss to extort 1 million yen from the president of a local construction company.

Shortcomings in the Act on Promotion of Specified Non-profit Activities have prevented local bodies from nullifying the authorization of incorporated nonprofit bodies.

The regulators can revoke the authorization of such groups if they failed to submit a report on their activities for at least three years, if they violated legislation and if they refuse to comply with orders for improvement of their activities. Even if such organizations have no revenue, their regulators cannot invalidate their authorization as long as these bodies submit an annual report on their activities.

(Japanese original by Yasuji Mukaihata and Ryuji Tanaka, Special News Group, and Tomoko Igarashi, City News Department)

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