TOKYO -- Police on Tuesday arrested the founder of Japanese language school Nova on embezzlement allegations, capping the fall of a businessman whose company had hundreds of thousands of students.
Police in the western city of Osaka arrested Nozomu Sahashi, the founder of what was Japan's largest chain of language schools until last year, on suspicion of embezzlement, a police spokesman said, declining further comment.
Sahashi was accused of misusing 320 million yen ($2.97 million) from a benefits fund set up through employee contributions.
Sahashi admitted using the funds but denied any wrongdoing, saying the money went to refund students who had cancelled their contracts.
"I would like employees to know that I used the money for the company," Sahashi said in a statement released Tuesday morning. "I did not spend a single penny of the company's funds for my private purposes."
Nova's collapse began last year when the government ordered it to halt part of its operations as punishment for insufficiently refunding students.
The controversy triggered a flood of students cancelling their own lessons, leading the company to file for bankruptcy protection.
"We hope the arrest will lead to clarifying the cause of the bankruptcy," lawyers in charge of the company's accounting in the bankruptcy said in a statement.
"We will study the possibility of filing civil cases against former president Sahashi," they said.
Sahashi established Nova in 1981, tapping into a Japanese passion for language study by setting up schools with trademark blue-and-yellow signs across major cities.
Before its collapse, Nova had an estimated 400,000 students and 6,000 employees, some 4,500 of them foreigners. Many teachers were young people looking to spend a few years in Japan.
Some foreign teachers offered to give lessons for food after Nova's collapse left them unemployed in one of the world's most expensive countries.
A number of Nova schools have been taken over by G.communication Co., which is based in the central city of Nagoya.
