Former Index CEO and president arrested on fraud charges
posted on 05.28.14 at 01:37 AM EDT by (@iiotenki)
Atlus' old parent company expected to now enter bankruptcy proceedings.

Sega Sammy Holdings and Index

Japanese business periodical Nikkei just broke word that former Index CEO Masami Ochiai and his wife, former Index president Yoshimi Ochiai, have been arrested by the Tokyo District Public Prosectors Office earlier Wednesday Japan Standard Time. Index, which was once the parent to Shin Megami Tensei and Persona development house Atlus, encountered a string of financial and legal troubles last year that ultimately culminated in the company’s sale to Sega Sammy Holdings and subsequent spinoff into a solutions business meant to function in isolation of Atlus. Translated details of both the arrest and the charges are as follow below.

Index Leaders Arrested on Suspicion of Falsifying Stock Reports

Former CEO of game content production company Index Masami Ochiai (age 54) and his wife, former president Yoshimi Ochiai (age 48), have been arrested by the Tokyo District Public Prosecutors Office on May 28 on charges related to the company’s collapse, namely window-dressing their financial records, as well as inflating profits and other related statistics by way of round-tripping in violation of the Financial Instruments and Exchange Law.

The special investigation team heading the probes into Index will proceed to fully uncover details behind the company’s accounting, as well as work with the governmental oversight committee in determining how to handle the company’s securities.

According to a source knowledgeable in the matter, Index utilized round-trip transacting to give off the appearance of dealing in IT systems and software in order for its records to show that buying and selling of goods was taking place, despite not otherwise actually actively conducting any business of the sort. As a result, the company is under suspicion of inflating its sales and profits for the business quarter ending in August 2012.

To hear Index’s stock report tell it, during that period, the company’s sales were approximately 183 billion yen [roughly $1.8 billion USD], with the final figures tallying at around 4 billion yen in profit [roughly $39 million USD]. At the time, these profits, the first the company had experienced in six quarters, were believed to put it in a surplus position, but this is now seen to be the result of inflated proceeds via round-tripping.

Index’s insolvency wasn’t made clear until after it had entered bankruptcy and an internal investigation was opened on it. There is a high probability that its round-tripping antics were as such done in an attempt to avoid having the company delisted from JASDAQ [the Japanese equivalent to stock exchanges such as NASDAQ in the United States and Euronext in the European Union].

Investigators are continuing their inquiries under the suspicion that the series of fraudulent dealings were headed by Index’s management and that their window-dressing was performed systematically. When asked about Nikkei’s findings thus far, Masami Ochiai denied them, asserting that he had “not been engaging in fraud.” He has also stated the same thing to the governmental oversight committee during hearings conducted on the matter.

Index was founded in 1995. While it had been listed on the JASDAQ, that status was removed last year after a Tokyo district court invoked the Civil Rehabilition Law. Control of the company was then handed off to Sega Sammy Holdings. Since that buyout, determining that Index was unable to put forth a revival plan, the same district court this past April officially put such efforts to rest and the company is now expected to enter bankruptcy proceedings.

Thanks to Elliot Gay via NeoGAF.

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  • 罪罰

    And thus, SEGA saved Atlus from these jokers.

    • DarthBrian

      Yeah, thanks SEGA for buying Atlus. Wow, never thought I’d say that. :p

      • 罪罰

        There’s always a first for everything.

      • Sevyne

        I know! It’s weird isn’t it?

      • Samsara09

        man,Index really are screwed.Oh well,people call it karma.

    • Budgiecat

      Now if only someone can save SEGA from themselves…

      • 罪罰

        If the media and their own fanbase were more acceptable and supportive, then maybe,

        • Budgiecat

          yeah lets both go to Japan and play some Pachislot and Pachinko games in their casinos…

        • DrForbidden

          If SEGA expects their fanbase to support them, they can start by actually giving them things they can support. You know, like games people actually want.

  • DarthBrian


  • Thomas James

    I don’t normally do business Japanese translations since that wasn’t my focus when originally studying the language, but hopefully the details of this are clear enough. I may update my translation from time to time for clarity, but the crux of the details should remain the same.

    For those of you not up to speed on some of the business terms here, feel free to check out these pages:

    • DarthBrian

      I understood every word! thanks for the effort. it’s appreciated! :)

    • DrForbidden

      You did a great job, don’t worry… :)

  • DesmaX

    Hory sheet

  • Thomas James

    Minor update. I forgot to translate a short sentence around the middle of the piece regarding the August 2012 financials. This has since been corrected. Sorry about that! Sal’s out for the night and when I’m left to my own devices for proofreading, sometimes things get missed. ;____;

  • new_tradition

    I just skimmed that, but can I take it to mean that this doesn’t actually effect Atlus in any way?

    • DrForbidden

      Nope. Not that is apparent, since Index no longer owns Atlus.

    • Luna Kazemaru

      no they left them remember

    • Sevyne

      Nope. Sega split Atlus off of Index when they bought out Index, so they are separate now.

    • Thomas James

      This is correct. As Sevyne just wrote, Atlus and Index are legally separate entities these days and these arrests concern how Index was administrated prior to the Sega Sammy buyout. I mostly wrote this article to provide an update to those interested in the developments of that continuing drama; you’re otherwise correct in assuming it’s not really a cause for concern.

  • David Curry

    See, this is why I love this site. Thanks for the translation.

    • Thomas James

      Just doing my job and happy readers like you find it useful! :)

  • Sevyne

    ^ YARRRR! Dis be a spambot, matey! So is the 1 “person” who “liked” it’s comment. They trying to be clever now. Just a warning to folks here.

  • Budgiecat
    • Warboss Aohd


  • Anime10121
  • Akari Akaza

    oh oh!! he is in trouble!…….0_0

  • Samsara09

    Index,you can rot in hell and don’t worry,Atlus won’t be accompanying you.You can go alone.

  • Kobracon

    Wait I thought everyone knew it was coz of dirty deals that lead to be bought by Sega. They are only NOW being arrested for it? A little slow don’cha think?

    • Thomas James

      It’s a fair claim to level to an extent, but Japanese prosecutors are also really thorough in their work. Unlike in the US and other countries, they actually have discretion in terms of whether to pursue charges in a trial or just drop them and they make that determination with a lot of background research and profiling on the defendants in question. We’re talking about people that are so hardcore that they’ll interview even people like teachers who knew the defendant in school and whatnot if they feel like it’s necessary to have that broad an understanding of who they’re dealing with.

      You’re right that it was probably an open secret that these people were at the center of Index’s problems, but it’s also one of those cases where if they didn’t intend to flee the country and they’re not in a position to do any more economic damage, it doesn’t hurt to take your time and build up a really rock solid case against them. You only get one chance a lot of the time to make an impact with high profile arrests like this, so they’re of the mindset over there that they’d better do it right because they likely won’t get it again if there’s a single hole anywhere in their evidence.

      • Kobracon

        Wow, that IS hardcore. Well I hope they get their just rewards and not cause trouble for other hardworking people.

  • Kurisu Makise

    Justice being served, can’t complain. Let’s hope the prosecution isn’t as incompetent as they are in a certain lawyer game I love ;D