High Court Gives Ex-Nova President 2-Yr Jail Term For Embezzlement

The Osaka High Court on Thursday sentenced the founder and former president of English conversation school operator Nova Corp. to two years in prison for embezzling 320 million yen of employees’ benefit funds, reducing a lower court sentence of three years and six months.

The defense counsel for Nozomu Sahashi, 59, plans to appeal the ruling as he has pled not guilty to the charge since his first trial at the Osaka District Court, saying he used the funds for the company and not personal benefit.

Presiding Judge Sumio Matoba determined that the accusation was upheld, however, saying the entity in charge of the funds was aimed at the welfare of employees and was separate from Nova by nature, and that Sahashi had inflicted damage to the entity.

According to the ruling, Sahashi transferred the sum accumulated at the entity to a bank account of a Nova subsidiary in July 2007 to reimburse fees students had paid on contracts that they subsequently cancelled.

But the judge recognized in handing down the shorter sentence that the embezzlement was aimed at continuing operating the company amid its management crisis and had an aspect of benefiting employees.

Sahashi launched English conversation classes in Osaka in 1981 and set up Nova in 1990. His venture once grew into Japan’s largest chain of English schools, with some 480,000 people taking language lessons at its peak.

A month after Nova went bust in October 2007, some of its business operation were taken over by Nagoya-based G.communication Co.

In August last year, Nova’s bankruptcy administrator filed a damages suit against Sahashi at the Osaka District Court, seeking about 2.1 billion yen in compensation for breach of trust.