Drug addict rehabilitation facility head accused of siphoning ¥110 million

A man who heads two general incorporated associations in Yamanashi Prefecture that operate rehabilitation facilities for people recovering from addiction improperly diverted about ¥110 million ($696,000) in organizational funds for personal use, sources familiar with the matter said Friday.

The Tokyo Regional Taxation Bureau determined that the two organizations had failed to withhold income tax on the payments.

They were ordered to pay approximately ¥47 million in additional taxes, including penalties for aggravated tax evasion, over a seven-year period through 2025.

The organizations cited were the Yamanashi Drug Addiction Rehabilitation Center’s headquarters, based in Kofu in the prefecture, and Grace Lord, a facility for gambling addicts, also based in the city.

Both operate residential facilities that support people recovering from addiction. Residents receive living allowances in exchange for paying monthly facility fees and other charges.

According to the sources, the man had the organizations make fictitious payments to him under the guise of living expenses, which he then used for personal purposes, including expensive dining and overseas trips.

Tax authorities determined that the payments constituted bonuses paid to the man and that the two organizations should have withheld a total of approximately ¥35 million in income tax.

They also imposed additional penalties, ruling that the case involved deliberate misrepresentation and concealment.

A representative of the two organizations acknowledged the tax investigation and said, “As organizations, we have handled the matter in accordance with the tax authorities’ findings.”