The Metropolitan Police Department on Wednesday arrested an ex-prosecutor of the Tokyo High Public Prosecutor's Office for allegedly starting an illegal partnership with a loan broker.
Akira Deguchi, 66, retired from the prosecutor's office in 1986 and has since been working as a lawyer.
Also arrested was another lawyer, 70-year-old Takeyoshi Norose, who is suspected -- along with Deguchi -- of serving as a partner for Hirokazu Takahashi, 57, the operator of a credit research agency.
Six loan brokers were also arrested and 22 locations were raided Wednesday in connection with the case.
Takahashi was charged in May with evading some 68 million yen in corporate taxes, and his firm, Cosmo Research, has been disbanded.
Norose was allegedly involved in helping 23 of Takahashi's clients renegotiate their debts, totaling tens of millions of yen, with personal finance companies.
Lawyers are banned by law from forming business partnerships with nonlawyers.
Investigators said they believe Deguchi and Norose have been involved in renegotiating debts of hundreds of clients and are searching for evidence.
Prior to his arrest, Deguchi maintained that he had never received any money from the former president of Cosmo Research and that he had been deceived.
Some in the legal profession estimate there are at least 100 lawyers in Tokyo alone who routinely illegally renegotiate personal loans.
Even senior bar association officials acknowledge that it is almost impossible to fully eradicate lawyers linking up with loan brokers because of the sheer number of individual bankruptcies. Some figures show that there are between 1.5 million to 2 million individuals who are bankrupt with excessive loans.
To counter such shady dealings, the Japan Federation of Bar Associations set up its own working group in April to discuss ways to collect information about, and strengthen surveillance of, attorneys linked to illegal deals.