YAKUZA ACTIVITIES; EXTORTION, WELFARE SCAMS AND INVOLVEMENT IN COMPANIES, CONSTRUCTION, REAL ESTATE AND BANKS

TRADITIONAL YAKUZA ACTIVITIES

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yakuza film poster
Organized crime operates fairly openly in Japan. The yakuza control many of Japan's pornography shops, pachinko halls, gambling parlors, "love hotels," and prostitution rings. It is also involved in hustling "protection" money from local businesses, loansharking, debt collecting, drug-trafficking, and gun-smuggling. Hill said the yakuza qualifies as a true mafia because it provides protection to “consumers who are otherwise denied access to protection from the state or who desire types of protection that the state is unprepared to provide.”

Bars and sex clubs that are run or protected by the yakuza are able to ignore health, fire and safety regulations, hire illegal immigrants, and avoid paying taxes. The yakuza are also deeply involved in baseball cheering groups, and use connections through the groups to obtain good tickets for scalping and reportedly even extort money from food vendors.

The yakuza also has links with trade unions such as longshoremen, construction companies that provide politicians with kickbacks, and business involved with waste and garbage disposal. They have been involved in illegally importing ozone-depleting CFCs for car air conditioners; made huge profits selling counterfeit phone and pachinko cards; worked with illegal drug manufacturers in North Korea; and collaborated with the China-based triad to smuggle immigrants, sell doctored passports and engage in credit card fraud; and is reportedly heavily involved in child pornography.

The yakuza is also into drugs on various levels. In August 2005, a senior member of the Yamaguchi-gumi crime syndicate was arrested and charged with selling ¥30 million worth amphetamines over the Internet. He set up a system in which people who visited his website were registered as members of the ring and ordered drugs using cell phones and received the drugs from couriers.

In 2007, a top member of a crime organization and his wife were accused of being modern-day Fagans. They instructed two young men that lived with them to snatch bags and purses The two rode on a motorcycle together and snatched bags from pedestrians and bicyclists, netting more than ¥20 million in 300 separate crimes.

Websites and Resources

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Hitokiri Ginji, Black Lagoon,
yakuza-like manga character
Good Websites and Sources: TrueTV Report on the Yakuza trutv.com/library/crime/gangsters ; Organized Crime Registry---The Yakuza orgcrime.tripod.com/japgangint ; Illegal Economy illegaleconomy.com/gangs/yakuza ;Yakuza in Japanese Politics Harvard Asia Quarterly ; Yakuza and Business japansociety.org ;

Yakuza History and Violence History of the Yakuza altman.casimirinstitute.net ; Yakuza Past and Present orgcrime.tripod.com/yakuzahistory ; Photos of a Yakuza Festival Fight tabblo.com/studio/stories Yakuza Culture: Yakuza Movies jingai.com/yakuza/movies ; Tattoos and the Yakuza inventorspot.com ; Punch Perm Hairstyle kid625.com/weblog/2005/12/yakuza_hair ; Film: The Yakuza directed by Sydney Pollack with actor Ken Takakura

Books: Yakuza Moon Memoirs of a Gangster's Daughter by Shoko Tendo and Louise Heal (2009);Yakuza Japan's Criminal Underworld by David Kaplan and Alec Dubro (2009); Confessions of a Yakuza: A Life in Japan’s Underworld by John Bester and Junichi Saga (1995); The Japanese Mafia: Yakuza, Law and the State by Peter B. E. Hill (Oxford University Press, 2003);Tokyo Vice: An American Reporter on the Police Beat in Japan by Jake Adelstein; Tokyo Underworld by Robert Whiting (Pantheon), describes of world of street pimps, ambitious gangsters and corrupt politicians; Tabloid Tokyo volumes 1 and 2 (Kodansha International), tales of sex, crime and the bizarre. E-Book and Reviews Revelations by Yakuza Daughter guardian.co.uk ; Underground with the Yakuza globalpost.com ; e-book Yakuza, Japan‘s Criminal Underworld by David Kaplan books.google.com/books

Links in this Website: CRIME IN JAPAN Factsanddetails.com/Japan ; THEFTS AND ROBBERIES IN JAPAN Factsanddetails.com/Japan ; JUVENILE CRIME IN JAPAN Factsanddetails.com/Japan ; FAMOUS MURDERS IN JAPAN Factsanddetails.com/Japan ; FAMOUS MURDERS IN JAPAN INVOLVING CHILDREN Factsanddetails.com/Japan ; YAKUZA AND ORGANIZED CRIME IN JAPAN Factsanddetails.com/Japan ; YAKUZA ACTIVITIES AND VIOLENCE Factsanddetails.com/Japan ; AUM SHINROKYO CULT AND THE TOKYO SUBWAY SARIN GAS ATTACK Factsanddetails.com/Japan ; SECURITY, GUNS AND POLICE IN JAPAN Factsanddetails.com/Japan ; LEGAL SYSTEM IN JAPAN Factsanddetails.com/Japan ; DEATH PENALTY AND PRISON IN JAPAN Factsanddetails.com/Japan

Sources of Yakuza Income

Until recently, the majority of yakuza income came from protection rackets in shopping, entertainment and red-light districts within their territory. This is mainly due to the reluctance of such businesses to seek help from the police. The Japanese police are also reluctant to interfere in internal matters in recognized communities such as shopping arcades, schools/universities, night districts and so on. In this sense, yakuza are still regarded as semi-legitimate organizations and many yakuza regard their income and hustle (shinogi) as a collection of a feudal tax. [Source: Wikipedia]

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Pachinko parlor
Many yakuza syndicates, notably the Yamaguchi-gumi, officially forbid their members from engaging in drug trafficking, while some yakuza syndicates, notably the Dojin-kai, are heavily involved in drug trafficking. Some yakuza groups are heavily involved in sex-related industries. Some yakuza groups are known to deal extensively in human trafficking. The Philippines, for instance, is a source of young women. Yakuza trick girls from impoverished villages into coming to Japan, where they are promised respectable jobs with good wages. Instead, they are forced into becoming prostitutes and strippers. The alleys and streets of Shinjuku are a popular modern Tokyo yakuza hangout.

As a matter of principle, theft is not recognised as a legitimate activity of yakuza. This is in line with the idea that their activities are semi-open; theft by definition would be a covert activity. More importantly, such an act would be considered a trespass by the community. Also, yakuza usually do not conduct the actual business operation by themselves. Core business activities such as merchandising, loan sharking or management of gambling houses are typically managed by non-yakuza members who pay protection fees for their activities.

There is much evidence of yakuza involvement in international crime. There are many tattooed yakuza members imprisoned in various Asian prisons for such crimes as drug trafficking and arms smuggling. In 1997, one verified yakuza member was caught smuggling 4 kilograms (8.82 pounds) of heroin into Canada.

In 1999, Italian-American mafia Bonanno family member, Mickey Zaffarano, was overheard talking about the profits of the pornography trade that both families could profit from. Another yakuza racket is bringing women of other ethnicities/races, especially East European and Asian to Japan under the lure of a glamorous position, then forcing the women into prostitution.

Pachinko Fraud and Gangsters

In an effort to keep tabs on pachinko industry, the Japanese government allowed owners to install high-stake machines in return for accepting stricter controls based on a system in which customers pay with magnetic cards. The system has turned be a disaster. The cards are easy to forge.

Pre-paid cards used by around 70 percent of the parlors. The biggest winners have been the criminals gangs that make the forged cards and the biggest losers have been the card manufacturers--- Mitsubishi and Sumitoro---because they earn their revenues from the cards and pay the parlors for allowing them to use them. Mitsubishi and Sumitoro lost over $525 million in 1996.

Gangsters also extort "protection" money from the huts that exchanges the pachinko prizes for cash. An estimated 30 percent of the kankins (huts where players exchange prizes for cash) are controlled by the yakuza.

Gangster Arrested for Scalping AKB48 Ticket

In June 2012, the Yomiuri Shimbun reported: “A crime syndicate member has been arrested on suspicion of scalping a ticket for the pop group AKB48's "general election" event, the Metropolitan Police Department said. According to the police, 37-year-old Kiyoshi Suyama from Machida, Tokyo, was arrested when he sold a reserved seat ticket for the event on a street near Nippon Budokan in Chiyoda Ward, Tokyo. The event to choose the AKB members to sing on the group's 27th single took place at Nippon Budokan. [Source: Yomiuri Shimbun, June 9, 2012]

Suyama allegedly purchased the ticket, which had a retail price of 3,000 yen, and sold it for 10,000 yen to a company employee in his 40s from Saitama Prefecture, an act violating the Tokyo metropolitan government ordinance banning scalping. "I thought the ticket would sell because it's for an AKB show," the police quoted Suyama as saying.

Yakuza Extortion


Yakuza palace
In Shinjuku gang members make monthly visits to bars and restaurants, demanding that owners pay ¥10,000 for air fresheners and doormats and buy New Year’s decorations, tickets for cherry-blossom viewing at a Tokyo shrine in the spring and vouchers for use of seaside houses in summer for ¥20,000 to ¥30,000 each season.

A shop owner in Shinjuku told the Yomiuri Shimbun he inherited the payment of protection money when he bought the shop. Every month he handed over ¥30,000 in cash to a gang member in an alley near his shop. He said the owners of a host club that refused to pay received calls from anonymous callers that told him, “We’ll crush you to death you damn fool!” and “If you continue to ignore us, you need to have lots of lives for survival.”

The yakuza often intimidate construction contractors into giving yakuza-affiliated group subcontracts. Contractor without gang supports are often intimated and the target of extortion by gangs. Some gangsters pick arguments with contractors, complaining about the noise coming from work projects or dust covering cars, and demand money as compensation ri force them to give subcontractors to firms affiliate with them. In a typical case, the yakuza harass a contractor building a road and demand that they hire traffic-control staff at unreasonably high wages, saying accidents will occur if they don’t comply.

Sixteen percent of those who responded to a survey of 4,285 prefectural branch offices and 10 central government agencies in 2005 said they had been subject to stand over tactics, blackmail, and extortion to get money or special treatment. Of the respondents who said they had been harassed, 34 percent said they were pressure to buy products, 31 were pressured to buy magazines and 8 to 11 percent were pressured to award public works projects. Of the groups that engaged in extortion, 46 percent said they claimed to represent former outcasts, 40 percent were pseudo-rightist groups and 3 percent claimed to be members of organized crime syndicates.

Local government officials are often extortion targets. A 57-year-old official from Kanuma municipal government environment protection department in Tochigi Prefecture was killed in connection with waste disposal contracts. A mayor in of Kodamamachi in Saitama prefecture was shaken down for cash.

In April 2008, four members of a gang affiliated with Yamaguchi-gumi, were arrested for trying to extort money from Index Holding, an information distribution firm, by threatened to make problems relating to Index-held shares in an educational material publisher. The gangsters entered an Index office, making threats like “We’ll collect the shares if you pay ¥400 million” and “Yamaguchi-gumi gangsters are after your executives.”

Survey: Yakuza Extorted 18 Percent of Companies

According to a National Police Agency survey, 18.4 percent of companies asked said they had been subjected to demands from organized crime syndicates such as extortion of money. The figure was almost the same level as a similar survey conducted in 2010 in which 21.8 percent of companies that received unreasonable demands complied with them. The survey was conducted in July 2012. Among 2,885 companies that responded to the survey, 337, or 11.7 percent, said they had received such demands from organized crime syndicates. Of the 337 companies, 185 had received such demands within the past year. [Source: Yomiuri Shimbun, November 17, 2012]

The Yomiuri Shimbun reported: “About 71.8 percent of the demands pressed companies to pay money, give product discounts or buy items to settle quarrels for which pretexts had been fabricated. Sixty-two of the 337 companies accepted either part or all of the demands. Five companies paid more than 5 million yen, the survey said. As some companies are believed to have given in to the demands for fear of reprisals, the NPA said it will make efforts to familiarize more companies with consultation services and improve protective measures. So far this year there have been 13 cases in which gangsters attacked citizens and companies and no arrests have been made. [Ibid]

According to the survey, 2,562 companies, or 88.8 percent of the 2,885 companies surveyed, knew about antigang ordinances that were enforced by Tokyo and the other 46 prefectures nationwide by October last year. Of them, 63.3 percent said the ordinances were effective in ostracizing organized crime syndicates. Sixty-one and a half percent of companies surveyed took measures to avoid becoming victims, such as incorporating a clause in contracts with other businesses that prohibits the involvement of organized crime syndicates; this number doubled from the previous survey. While 94.6 percent of companies listed on the First Section of the Tokyo Stock Exchange took such measures, only 37.7 of individual business operators did so, the survey said. [Ibid]

Data released in 2007 reported a big increase in the number of extortions, many of them gang related. Police received 1,207 reports of extortion, a fourfold in crease from 1997 and 356 cases were related to gang members or members of right-wing organizations, a fivefold increase from 1997.

Yakuza as Dispute Settlers and Loan Collectors

Jiken-ya ("incident specialists") are yakuza members who have traditionally been called in to settle disputes rather than lawyers. After an auto accident, for example, one party might hire the yakuza to pay a visit to the other party and "propose" a settlement. Usually an agreement is made without threats or violence. But if the money isn’t paid gangsters will threaten to break bones or put daughters to work in massage parlors until the debt is paid.

One sociologist told Newsweek, "There's long tradition in Japan of people not having recourse to formal legal institutions." Another told the Yomiuri Shimbun, “When there are problems, the police don’t act right away, and it takes tome and money to hire lawyers. So groups such as ours are needed.”

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yakuza members

Business saddled with bad loans have hired the yakuza to intimidate liquidators. In 1994, a Sumitomo Bank branch manager was killed after he reportedly tried too aggressively to collect loans from shadowy customers. In the early 1990s there were more than 50 reported yakuza attacks against financial institutions and companies involved with collecting bad loans. No doubt, there were probably numerous unreported cases as well.

By the same token, banks holding bad loans sometimes hire the yakuza to collect money owed them and confiscate equipment and furniture from debt-ridden companies ahead of other creditors. Not many banks are reluctant to chase after bad loans held by the yakuza because they don't want their own yakuza links exposed.

The yakuza was involved in a number of fraudulent financial and real estate schemes in the bubble economy years and made out quite well. But it like many other enterprises in Japan they were burned when the bubble economy collapsed. By one estimate the value of the crime world dropped from around $400 billion in 1990 at the height of the bubble economy to around $200 billion in 2000.

See Loan Sharks, Crime

Yakuza and Business

The yakuza have infiltrated banks, large corporations and stock traders. According one estimate almost half all yakuza members are involved in business crime or legitimate businesses. One yakuza expert told the Washington Post, "They have spread the power to every corner of society. Wherever there is money there is yakuza."

When the Japanese economy grew, the yakuza expanded and move away from small time debt collection and pimping into more profitable white collar crimes such as extortion, fraudulent stock trading and shady real estate dealings. The yakuza has made millions of dollars from legitimate business such as stock trading and the running of restaurants in Honolulu, Paris and Buenos Aires. In 1999, one gangster owned one million Japan Airlines shares. A group of gangsters founded their own bank in California.

Police have identified more than 800 yakuza front companies in Tokyo alone. They include investments and auditing forms, construction companies and pastry shops. In many ways the yakuza white-collar gangsters are like regular businessmen until thing don't go their way and they threaten violence.

Justin McCurry wrote in The Guardian: Faced with depleting returns from traditional cash cows, many became active in the stock market, earning their money via front companies that appear to be respectable. The national police agency warned in a 2010 report that some firms had no idea they were dealing with the underworld. "As crime syndicates have become very sophisticated in making their activities to acquire illicit funds opaque in recent years, it is quite possible that ordinary companies unknowingly conduct economic transactions with them," the report said.

Peter Hessler wrote in The New Yorker, “many yakuza became rich during the bubble economy of the 1980s and 90s, and they developed extensive corporate structures. Nowadays, yakuza run hedge funds. They speculate in real estate. The Inagawa-kai, one of the three biggest gangs, has an office across the street from the Ritz-Carlton Hotel. [Source: Peter Hessler, The New Yorker, January 9, 2012]

Hessler described one yakuza who went to college and spoke perfect English and worked for a public relations firm before he became yakuza: “In the evenings, it was Miyamoto’s task to escort the gaijin to the massage parlors known as “soaplands,” where customers enjoy a bath, a massage, and sex. Eventually, some yakuza extorted the public-relations firm , threatening to go to the tabloids with stories about American auto execs at soapland. Miyamoto handled the payoff, and then the next shakedown, and so he became the firm’s defacto yakuza liaison. The gangsters liked what they saw and recruited him away from the agency...Since then Miyamoto had become a full gang member, although his oyabun told him to avoid tattoos because they would be a liability in the cooperate world...Nowadays he helped his gang manage three hedge funds.” Miyamoto told Hessler about a yakuza in another gang that worked for Deutche Bank. [Source: Peter Hessler, The New Yorker, January 9, 2012]

Yakuza, the Stock Market and Companies

The yakuza have a significant presence in Japanese financial markets. Japan’s Securities and Exchange Surveillance Commission knows of at least 50 major companies with ties to organized crime. The yakuza has reportedly deeply infiltrated companies listed on the Osaka Stock Exchange. Authorities have raised the idea of reviewing all listed companies and expelling those with mob ties.

The links between organized crime and business are more entrenched in corporate Japan than in the United States police say. “Organized crime is threatening Japan’s entire economy,” Kohei Kishi, director of the organized crime division of Japan’s National Police Agency, told the New York Times. The yakuza have such deep roots in Japanese business, Jake Adelstein, who has written extensively about Japanese organized crime, called the yakuza “Goldman Sachs with guns.”

Japanese corporations routinely deal with gangsters and sokaiya (corporate extortionists) and pay off losses to valued clients. A Japanese economic professor told AFP, "A lack of corporate morality is one of the most pressing problems the country has to tackle."

By misusing the credit guarantee system for small and mid-size companies, two members of the Yamaguchi-gumi crime syndicate swindled 20 financial forms out of $48 million. Nationwide gangsters probably swindled tens of million more using the same or similar schemes.

Yakuza Business Crimes

Yakuza frequently engage in a uniquely Japanese form of extortion, known as so-kaiya. In essence, this is a specialized form of protection racket. Instead of harassing small businesses, the yakuza harasses a stockholders' meeting of a larger corporation. They simply scare the ordinary stockholder with the presence of yakuza operatives, who obtain the right to attend the meeting by a small purchase of stock. [Source: Wikipedia]

They also engage in simple blackmail, obtaining incriminating or embarrassing information about a company's practices or leaders. Once the yakuza gain a foothold in these companies, they will work for them to protect the company from having such internal scandals exposed to the public. Some companies still include payoffs as part of their annual budget.[citation needed]

Yakuza also have ties to the Japanese realty market and banking, through jiageya. Jiageya specialize in inducing holders of small real estate to sell their property so that estate companies can carry out much larger development plans. Japan's bubble economy of the 1980s is often blamed on real estate speculation by banking subsidiaries. After the collapse of the Japanese property bubble, a manager of a major bank in Nagoya was assassinated, and much speculation ensued about the banking industry's indirect connection to the Japanese underworld. Yakuza often take part in local festivals such as Sanja Matsuri where they often carry the shrine through the streets proudly showing off their elaborate tattoos.

Yakuza have been known to make large investments in legitimate, mainstream companies. In 1989, Susumu Ishii, the Oyabun of the Inagawa-kai (a well known yakuza group) bought US$255 million worth of Tokyo Kyuko Electric Railway's stock. Japan's Securities and Exchange Surveillance Commission has knowledge of more than 50 listed companies with ties to organized crime, and in March 2008, the Osaka Securities Exchange decided to review all listed companies and expel those with yakuza ties.

Yakuza, Banks, Bad Loans and the Bubble Economy


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The yakuza made billions of dollars during the bubble economy years and vastly increased its power. They borrowed heavily and invested heavily in speculative real estate deals. The godfather Susumu Ishii received $2.3 billion in loans and loan guarantees from banks. brokerage houses, construction firms and delivery houses.

When the bubble economy collapsed the yakuza was saddled with huge debts. In many cases the yakuza refused to repay its loans or turn collateral and made threats against banks that tried to seize their assets. Typically when the yakuza threatens a bank, the bank backs off on its loan collecting. This was especially the case after two bank executives were murdered in the mid 1990s.

The yakuza is believed to be directly linked to about 10 percent of Japanese bank's bad loads and suspected to be involved in 30 percent more. The debt from these loans has been estimated as high as $1 trillion. Some people even called Japan's economic problems in the 1990s the "yakuza recession."

During the economic slump many yakuza members began doing more business overseas and exploiting weakness to in the economic to move into legitimate real estate, bank-lending and debt collecting businesses. Some yakuza members made a lot of money from bankruptcies. They targeted struggling businesses and milked them dry by convincing them they could make a lot of money by going onto bankruptcy.

Reminiscing about extorting banks in 1980s one former yakuza told The New Yorker: “Sometimes we?d send three guys with cats and would twirl the cats around by the tail in front of the bank. They’d do that until the bank finally gave them a loan. Or we’d have a hundred yakuza line up outside a ban. Each would go in and open an account for one yen, which was the lowest amount allowed. It would take all day until finally the bank would agree to give us some loans, to get rid of us.” The yakuza said they wouldn’t pay the loans back, “But we’d give the bank some protection, as well as help with collecting other bad loans. So it wasn’t a terrible deal for them.” [Source: Peter Hessler, The New Yorker, January 9, 2012]

Japan second largest bank, Dai-ichi Kangyo, was accused of loaning $260 million to a gangsters who used the money to buy stakes in brokerage firms. In an investigation by Kroll and Associates of one bank, 40 percent of the borrowers had ties with organized crime and 25 percent had criminal records for things like rape, extortion and assault.

Many Japanese are angry that tax money is used to pay off banks that lost money because of their shading deals with gangsters. Much of the loan money has disappeared and most think that the money lost by the yakuza will never be recovered.

In response to allegations that Japan's bad loan problem is the fault of the yakuza, gangster boss Tokutaro Takayama told Time: "It's easy to blame it all on us. But it's tactic to shift responsibility away from bureaucrats and politicians and heap it on the yakuza."

Yakuza, Real Estate and Extortion

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Kyokuryu kai symbol
Yakuza own parking lots and undeveloped land and have been so involved in buying up land, whose valued has dropped since the bubble economy, that American companies that buy Japanese land have contracts with escape clauses that nullify deals if yakuza involvement is discovered.

In regard to yakuza real estate investments, Takayama said, "What's wrong with yakuza buying land” There's no law against it...Sure we borrowed money. But were secured our loans with collateral, unlike the jusen [housing loan companies] debtors."

One of the yakuza's most common money-making operations is called jiange (selling real estate to make a quick profit). Typically, yakuza stake out an apartment building they want to purchase, occupy or tear down for a development and harass tenants into moving out. With no rent money coming in, the owners of the building are forced to sell the building to the yakuza or friends of the yakuza at below market value. The building is then quickly fixed up and sold for a quick profit or developed.

The yakuza also force tenants out or occupy empty apartments and refuse to leave until they were paid off. Many gangsters set up comfortable homes in occupied apartments owned by landlord frightened or unable to get help from the police to throw them out. Sometimes gangsters even sublet the apartments or offices they illegally occupy.

Gang members also approach businesses laden with debt under the auspices of trying to help them and then force the owners to hand over the title to their properties by making threats against their family. They also file liens and demand pay-off money to drop their claims and show up in numbers at foreclosure auctions and scare off other bidders. One yakuza member told Time, "It got to the point where we could just rent out the gang's name to developers."

Jake Adelstein wrote on The Atlantic online: In March of 2008, according to the Japan Times and police sources, the TMPD (Tokyo police) arrested several members of a Yamaguchi-gumi front company for working to evict tenants from properties that a listed firm, Suruga Corporation, wished to acquire. In Japan, only lawyers are allowed to negotiate evictions and the yakuza members had clearly violated those laws. In the subsequent investigation, Suruga Corporation was revealed to have paid millions of dollars to the yakuza for their help in acquiring properties. However, the investigation eventually fizzled out and no one from Suruga Corporation was charged with a crime. Even though paying off the yakuza was not a crime at the time, the presence of former high-ranking bureaucrats from the National Police Agency and an ex-prosecutor on the Suruga board of directors made the scandal an embarrassment to all involved. The relationships between Suruga and the Yamaguchi-gumi, however, did result in almost all banks cutting financial ties with the firm, as well as the company’s delisting from the Tokyo Stock Exchange. According to law enforcement and Kyodo News service, Suruga Corporation executives who knew about the police investigation and sold off their stock before it became public knowledge were later arrested for insider trading this May. [Source: Jake Adelstein, The Atlantic, August 31, 2011]

Yakuza and Welfare Scams


Mafia in Japan
The yakuza uses various welfare scams to illegally collect social benefits. The scams include pretending to divorce their wives, pretending to leave their criminal organizations and falsifying information about their income to collect government handouts. The global financial crisis in 2008 and 2009 has provided them with opportunities as the number of people applying for social assistance has increased.

In Kyoto one man presented a fake letter to government officials saying that he had severed ties with a criminal gang---taking advantage of racketeering amnesty laws---and received $67,000 over 4½ years while continuing to act as member of the gang. In Nagoya three gangsters collected a total of $67,000 in welfare payments after submitted fraudulent documents. In Kanagawa a yakuza member recived $13,000 after submitting divorce papers but continued to live with his wife.

In many cases gang members simply didn’t record income they earned through their gang activities and claimed welfare payments. In March 2006, a a ban on such payments was introduced. A survey found that even after the ban was introduced payments continued.

Once a scam is discovered authorities have trouble getting the money back. In Takikawa, Hokkaido, one gangster received $2.4 million in welfare payments and reimbursement for fraudulent medical claims but the government was only able to get $340,000 of the money back. The government said it had difficulty getting the money because it was hard to prove the medical claims were fraudulent and it was hard to prove that the suspect was indeed a gang member.

Welfare Scams Involving Gangsters in Japan

In 2007, according to a Yomiuri Shimbun report, a former gangster was arrested in Takikawa, Hokkaido, for conspiring with a taxi service to pad fares for trips to a hospital about 100 kilometers away in Sapporo. Along with his wife, the man, 46, who has already been convicted, is believed to have received up to 130 million yen in benefits per year, accounting for about 10 percent of the municipality's welfare budget. The two are believed to have received more than 200 million yen in total in the fraud, and some of the money is said to have gone to the man's criminal organization. The city government was unaware of the fraud for more than a year after the payments started.

A former senior official of the Hokkaido prefectural police who was in charge of the case said the amount was absurdly high, and the city should have discovered it sooner. "Several gangsters told me it is very easy to get money from government offices. They said, 'All we need to do is bang on the desk and intimidate them,'" he said.

There are many similar incidents, including a case in July, in which a gangster was arrested in Adachi Ward, Tokyo, for illegally receiving 11 million yen in welfare payments. Alarmed by these cases, the ministry notified municipal offices to contact police if they received dubious welfare applications and to refrain from paying benefits in principle when applications were filed by gangsters.

But the ministry only cited the "attitude when applying" or " living conditions" as benchmarks to decide whether police should check applications. An official in charge of welfare in Aichi Prefecture said it was hard to weed out gang members since no one overtly acts like a gangster when applying.

A recent court decision stunned municipal governments regarding police checks. The Miyazaki District Court on Oct. 3 ordered the Miyazaki municipal government to withdraw its rejection of a welfare application filed by a 60-year-old man. The city rejected the application because the Miyazaki prefectural police identified the man as a member of an organized crime group affiliated with the Yamaguchi-gumi crime syndicate. The court ruling said the decision on whether to pay the benefits should be made without relying solely on police information.

The city was apparently bewildered by the decision, questioning how it could check the man's background without an investigation as it has no authority to conduct criminal investigations. The city said it could not prevent illegal activities if it was unable to use police information. Others in the national and local governments are also questioning the ruling, and there is a great deal of anticipation surrounding an appeal court's ruling on the case.

Yakuza and the Construction Industry


yakuza tattoos
Kohei Kishi, director of the organized crime division of Japan’s National Police Agency, told the New York Times that the yakuza has “deep roots in construction.” The Japanese construction industry is valued at ¥30 trillion ($362 billion). In the 1990s, at the peak of yakuza involvement with construction, police estimate that gangs pocketed at least 2 to 3 percent of all construction spending in Japan. In a 2007 police survey of 3,000 construction companies in Japan, 34 percent of respondents said they had been approached by the yakuza with requests for payments or business in the last year. [Source: Hiroko Tabuchi, New York Times, November 18, 2010]

Hiroko Tabuchi wrote in the New York Times, “In the construction industry, the yakuza’s influence dates back to at least Japan’s extensive rebuilding after the devastation of World War II, when the mob helped supply cheap labor to contractors, aiding in the breakup of worker strikes and the enforcement of labor compliance.” Yakuza bosses pressure “developers to pay “protection money” to cover construction projects or use front companies to win lucrative construction or procurement contracts, police say.” [Ibid]

“Sometimes it is the developers that reach out to the yakuza---to muscle reluctant owners into selling their land, for example,” Tabuchi wrote. “In 2008, the president of a big real estate company, Suruga, resigned after police arrested members of a front company that Suruga had hired to evict occupants from a Tokyo building. Banks quickly recalled their loans from Suruga, and the company went bankrupt.” [Ibid]

“The construction industry was once tolerant of yakuza involvement,” said Hiroshi Inuzuka, a lawyer and adviser to the nationwide Federation of Construction Contractors, a trade group, told the New York Times. “A good project manager was expected to smooth over “local relations,” which involved working with the yakuza so there would be no trouble.” [Ibid]

Sokaiya


yakuza tattoos
Sokaiya, are a distinctly Japanese type of of corporate extortionist who buys a few shares in a major firm and threatens to disrupt shareholder meetings with confidential information if he is not paid off. Cooperate executives make the payments because they are worried that the value of the shares might drop and they don't want to lose face. A few hundred thousand dollars is pocket money for many large Japanese corporations.

Buying a few shares of a targeted company gains the sokaiya access to the shareholder meetings. Damaging information is obtained by scrutinizing financial documents, paying informers, speaking with disgruntled employees and competitors, robbing post offices, and eavesdropping on E-mail.

The kind of information that sokaiya black mail corporations with includes allegations of involvement with gangsters, tax evasion, money-losing investments, photos of an executive with a woman who is not his wife, and evidence that executives have trouble-making children. They solicit illegal payments by sending a list of "sample" questions to company executives or threats to disrupt shareholder meetings, harass executives with loud speaker attacks and even use physical violence.

Hideo Sakamaki, the president of Nomura, one of Japan's largest securities firm, was arrested in June, 1997 for paying off a sokaiya. Nomura had manipulated stocks to help gangsters and kept secret accounts for top politicians and bureaucrats. Nomura reportedly placed $400,000 in the account of a younger brother of a sokaiya Two employees at the food giant Ajinomoto, and executives at the prestigious Takashimaya department store have been arrested on charges of paying hundreds of thousands of dollar sokaiya.

Many companies pay off sokaiya who threaten to inquire about lackluster profits and high expenses, questions that would be routine at an American stockholders meeting. "It sounds like a joke," one sokaiya told the Los Angeles Times, "but if you go to the general affairs department of certain companies and say, 'What's happening about that matter?' then without even finding out whether you know anything, they just bring out an envelope" full of cash.

Confessions of Sokaiya

One sokaiya told the Los Angeles Times that rarely make threats or resort to violence and he sees his job as making sure that stockholder meetings so smoothly. "We don't bother to go to companies that hate us; we work with companies that are our friends," he said. "It's not just back-door information. There are company presidents who have graduated from Tokyo University Law Department and who just can't stand it when someone gets up at a shareholder meting and screams, 'You're an idiot."

Company presidents "tend to be proud people, who don't want to get stalled." one attorney told the Washington Post, "That would hurt their pride."

Kaoru Ogawa, Japan's most famous sokaiya, refers to himself as the "Japanese Ralph Nader." Among other thing she encouraged Japan Air Lines shareholder to boycott the company until it got its business in order and urged executives at Honda to come up with some more exciting designs.

Decline of Sokaiya

Laws against sokaiya have been on the books since 1982 but they were not really enforced until 1997. According to police the number of sokaiya has dropped from 6,783 in 1982 to around 1,000 in 2000 to only a handful today. Many have taken up other kinds of work or adopted a lower profile.

To combat sokaiya many companies decided to hold their shareholder meetings on the same day, limiting the number that sokaiya could attend. Once, 2,300 meeting were held in one day. One securities expert told the Los Angeles Times that ecev that wasn’t necessary. "If they would permit freedom of expression at shareholder meetings, the sokaiya wouldn't have an opening.”

Globalization and the movement towards transparency has made sokaiya obsolete. Executives no longer fear sokaiya. In 1999, one corporate layer told the New York Times, "They have been reduced to a level we can almost ignore.”

Yakuza in the United States

Yakuza activity in the United States is mostly relegated to Hawaii, but they have made their presence known in other parts of the country, including Fresno, Raleigh, Houston, Oregon, Denver, Chicago, and New York City. The yakuza are said to use Hawaii as a way station between Japan and mainland America, smuggling methamphetamine into the country and smuggling back firearms to Japan. They easily fit into the local population, since many tourists from Japan and other Asian countries visit the islands on a regular basis, and many Hawaii residents are of full or partial Japanese descent. They also work with local gangs, funneling Japanese tourists to gambling parlors and brothels. [Source: Wikipedia]

In California, the yakuza have made alliances with local Vietnamese and Korean gangs as well as Chinese triads, with Vietnamese as the most common alliance. The alliances with Vietnamese gangs dated back in the late 1980s, and most Vietnamese gangsters were used as muscle, as they had potential to become extremely violent as needed. (Yakuza saw the potential following the constant Vietnamese cafe shoot outs, and home invasion burglaries throughout the 80s and early 90s). The Vietnamese gangsters were also not as reckless and easy getting caught as other ethnic gangs around the area, which attracts the Yakuza. In New York City, they appear to collect finders fees from American mafiosos and businessmen for guiding Japanese tourists to gambling establishments, both legal and illegal.

Handguns manufactured in the U.S. account for a large share (33%) of handguns seized in Japan, followed by China (16%), and the Philippines (10%). In 1990, a Smith & Wesson .38 caliber revolver that cost $275 in the U.S. could sell for up to $4,000 in Tokyo. By 1997 it would sell for only $500, due to the proliferation of guns in Japan during the 1990s.

The FBI suspects that the yakuza use various operations to launder money in the U.S. In 2001, the FBI's representative in Tokyo arranged for Tadamasa Goto, the head of the group Goto-gumi, to receive a liver transplant in the United States, in return for information of Yamaguchi-gumi operations in the U.S. This was done without prior consultation of the NPA. The journalist who uncovered the deal received threats by Goto and was given police protection in the US and in Japan.

See Sumo Scandals

Image Sources: Wikipedia, Wiki Commons Japan Zone

Text Sources: New York Times, Washington Post, Los Angeles Times, Daily Yomiuri, Times of London, Japan National Tourist Organization (JNTO), National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2009 Jeffrey Hays

Last January 2013

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