UPDATE: Japan’s 3rd Most Powerful Yakuza Boss Arrested On Money Laundering Charges

This week Kazuo aka Kazuya Uchibori, the de facto head of the Inagawa-kai, Japan’s 3rd largest organized crime group, turned himself into the Tokyo Metropolitan Police. He was wanted on charges of fraud and money laundering charges.  This may be the first case in which the payment of association dues (上納金/jonokin) is prosecuted successfully as a money laundering case, and if it stands up in court–which appears unlikely—it could be the beginning of the end for the modern yakuza.  The jonokin system is the financial spine of Japanese organized crime groups. Fortunately for Mr. Uchibori, the current Minister of Justice, Keishu Tanaka has long been a close associate of the Inagawa-kai. A great time to have friends in high places!

Japan’s organized crime groups are essentially franchise operations–think of Amway crossed with Bain Capital–then add guns, tattoos, loyalty oaths and swords. The organizations are pyramid structures with people on the bottom paying their way up to the top. Up until now, there has not been a solid case for cracking down on the payment of jonokin (dues) as a criminal activity.

Tokyo Reporter has the details.

TOKYO (TR) – The Tokyo Metropolitan Police on Tuesday morning arrested the number-two boss of the Inagawa-kai organized crime group for accepting proceeds acquired through a credit card fraud that facilitated payments to sex clubs, reports the Sankei Shimbun (Aug. 20).

Officers from the anti-organized crime division of the metropolitan police took Kazuya Uchibori, 59, into custody for receiving proceeds generated by criminal activities — a violation of the Act for Punishment of Organized Crimes.

Uchibori has reportedly denied the allegations. “I don’t know what you are talking about,” investigators quoted the suspect.

In an ongoing sting, officers have thus far made 12 arrests, including last month’s apprehension of two other Inagawa-kai upper members, Takashi Yamaguchi, 62, and 46-year-old Hirofumi Matsuyama.

The scheme involved establishing fake restaurant businesses that served to broker payments for customers at 30 sex clubs that were not able to accept credit cards. A 20 percent premium — as reported by the Mainichi Shimbun — was then added to the sex club fees, which was collected by the gangsters.  In March and April of this year, Yamaguchi and Matsuyama are alleged to have received 650,000 yen in funds provided by lower-ranking Inagawa-kai boss Kimihiro Tsukada, 65, currently on trial for computer fraud, through the gang’s jonokin system in which junior members funnel money to upper bosses.

Go here for the rest of the story

Notes: Mr. Uchibori had previously been arrested and found guilty of obstruction a public auction in 2009. He was given a suspended sentence. If he had been arrested before the date he turned himself in, the suspended sentence could have been put into effect, in addition to the new charges. This could have resulted in a very long jail sentence. Some members of the Yamaguchi-gumi, Japan’s largest organized crime, criticized Uchibori for not turning himself into the police as soon as an arrest warrant was issued–as was the yakuza custom in the past–but under the current circumstances it probably made sense to show up late to the party.

The money laundering case against Mr. Uchibori appears to be weak and the odds are that after spending two more weeks in jail, that he will be given bail, and not prosecuted. Mr. Uchibori is officially the number two of the Inagawa-kai, serving as the Chairman of The Board, under Mr. Jiro Kiyota, the 5th Generation Leader. However, in yakuza fan magazines photo-shoots of the organization, Mr. Uchibori, is always standing at the helm of the organization and his blood-brother relation (兄弟分）to Mr. Takeuchi, in the Yamaguchi-gumi Kodo-kai (山口組弘道会）makes Mr. Uchibori extremely influential and powerful.