The Yokohama District Court sentenced two former executives of the failed jewelry retailer Koko Yamaoka Co. to prison terms Thursday for selling jewelry in a fraudulent manner.
Natsuki Homma, 63, former vice chairman of the Yokohama-based company, was sentenced to five years and six months in prison while former President Norio Morishita, 47, received a two-year sentence.
Homma and Morishita defrauded 89 customers out of about 129 million yen between April and December 1996. They sold diamond rings and other jewelry to customers, promising that the company would buy them back at the original purchase price after 5 years while knowing the company was on the verge of bankruptcy, according to the court.
The two men pleaded not guilty, claiming that economic conditions caused the bankruptcy and that they did not intend to defraud the customers.
Because the money was paid on credit, some 8,800 people who had bought Koko Yamaoka jewelry for about 14.6 billion yen sued consumer finance companies to demand a refund of their loan payments.
The two men's prison terms include convictions for aggravated breach of trust in violation of the Commercial Code, the court said.
The two and Yoshikuni Hara, 56, president of Japan Jewelry, a Koko Yamaoka affiliate, caused financial damage to Koko Yamaoka of some 750 million yen by pretending they had sold jewels to the affiliate, the court said.
Hara received a three-year prison term.
Koko Yamaoka went bankrupt in January 1997.