In his guilty plea, Nozumu Sahashi admitted that he’d taken funds from a teachers benefit fund to cover escalating losses of his chain of English-language schools, but that he didn’t know his actions were illegal. Unfortunately, this argument didn’t win much sympathy from either the jury or the judge. Sahashi on or about August 26 was found guilty and sentenced in a Japanese court to three and a half years in prison for embezzling 320 million yen (at the time, about US$3.1 million) from the reserve fund of a mutual aid organization for employees of Nova Corp. The Osaka-based company, now in bankruptcy, operates under different management and under a new name.
Sahashi, 57, founded Nova in 1990 as a successor to an English-language instruction program he’d developed nearly a decade earlier. At its peak, the for-profit school network enrolled around 300,000 students and employed 4,000 foreign instructors at some 900 branches, mainly from Australia. But company fortunes began to tank after a Japanese court in June 2007 ordered it to suspend operations until it revised deceptive tuition advertising practices. Faced with a sudden loss of enrollment, Sahashi the next month ordered a senior accountant, Tochihiko Murata, to transfer 320 million yen to a bank account of a Nova affiliate to be used for refunding prepaid tuition to former students. Three months later in October 2007 the school filed for bankruptcy.
Sahashi admitted in court that he’d masterminded the scheme, but pleaded not guilty on grounds that he had intended to repay all funds. His defense lawyer claimed his client “made no personal gain through his actions” and “gave the language school chain personal assets worth much more than the reserve funds and didn’t intend to embezzle the money.” But the jury wasn’t impressed, and found Sahashi guilty of embezzlement. Osaka District Court Judge Hiroaki Higuchi promptly issued a 42-month sentence. “He had no prospects of repaying the money, and he bore grave criminal responsibility,” said Higuchi, adding he “misused the funds knowing that the employees wouldn’t approve.” A good many of those employees may have gone home, but it may be a while before they see their money.