The former president of English conversation school Nova was handed a two-year prison sentence for corporate embezzlement by the Osaka High Court on Dec. 2.
Nozomu Sahashi, 59, had been convicted of the offence by a lower court and sentenced to a three-year, six-month prison term in August last year. The high court decision on Sahashi’s appeal confirmed his conviction for embezzling money from employees, but reduced the sentence as the funds were used to pay back customer deposits and Sahashi did not himself profit from taking the money. Sahashi intends to appeal.
According to the lower court ruling, Sahashi wrote a check for the entire amount in the Nova employees’ Shayu-kai mutual aid fund account — some 320 million yen — and deposited it in an account held by a Nova-associated company.
“The entire purpose of the Shayu-kai was employee welfare, and you used it for an entirely different purpose,” said Presiding Judge Sumio Matoba in the high court ruling. “You were Nova’s primary shareholder, and there is no trace you ever committed to returning the money you took. Thus, this court can conclude that you had criminal intent when you embezzled the funds.”
Sahashi’s defense counsel argued that “The Shayu-kai did not exist as an independent entity, but was just one part of the company. The entire sum withdrawn was set aside for refunding customers, and thus was not embezzled.” Furthermore, “If Nova had not been able to refund its customers, it would have gone bankrupt, and Mr. Sahashi fully intended to return the funds once the company attracted new investment.”
Nova was founded by Sahashi, and at its peak had some 1,000 schools nationwide. However, it was ordered to suspend part of its operations by the Ministry of Economy, Trade and Industry in June 2007. Nova declared bankruptcy in October that year. A suit the company’s bankruptcy administrator filed against Sahashi for the recovery of over 2.1 billion yen is currently being heard at the Osaka District Court.