Japanese business magazine Nikkei is reporting that former CEO of Index, Masami Ochiai, and his wife, former Index president Yoshimi Ochiai, have been arrested by the Tokyo District Public Prosectors Office today on charges of fraud related to the collapse of Index.
Index is the former parent company of Atlus, developers of the Shin Megami Tensei and Persona franchises. Last year Index faced a litany of financial and legal issues that resulted in the company’s sale to Sega Sammy Holdings.
Masami and Yoshimi Ochiai are accused of inflating the company’s numbers through an illegal practice called “round-tripping.” This involves selling unused assets to another group with an agreement to later buy back the same assets at the same price, creating the appearance of economic activity and increased revenue. Enron famously used round-tripping to inflate its own stock outlook before its 2001 bankruptcy declaration. It is believed that Index used this practice to avoid being delisted from JASDAQ, Japan’s version of NASDAQ.
When asked about the charges by Nikkei, Masami Ochiai denied the claims, stating that he had “not been engaging in fraud.” He reiterated his innocence to a governmental oversight committee investigating the matter.