Bank statements inflated to gain loans for ailing investment plan:The Asahi Shimbun

With his investment failing and his savings account shrinking, a man in his 30s visited a bank to request a review of the repayment conditions for his huge loan.

Most of the loan from Suruga Bank Ltd. was used for his investment of more than 100 million yen ($920,000) in a share house project organized by a real estate agent. But with the returns halted, the man feared he would be unable to make his loan payments after a few months.

An official at a Tokyo branch of the bank was perplexed by the man’s request.

“We have a copy of your bank book that shows you have 30 million yen in your account,” the bank official said. “You also made a down payment of 20 million yen on the investment, didn’t you?”

It was then the investor’s turn to be baffled.

He explained that he only had several hundred thousand yen in his account, and that he never made a down payment.

Both the bank official and the investor realized that they had been duped.

The real estate company had apparently inflated the amount in the man’s bank account to make it easier for him to gain the huge loan, which would cover his investment in the company’s share housing project.

About 800 investors, many of whom were company employees who took out large loans to join the program, have reported that they have not been receiving the returns as promised.

And now, a number of questionable cases of rewritten bank statements have arisen in connection with share house investments handled by Tokyo-based Smart Days Inc.

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Under the plan, the investors paid about 100 million yen for a single share house project.

Renters using individual rooms would share common facilities, such as the kitchen and restroom, in the houses.

The investors were promised monthly returns in the form of rent for the rooms in the share house.

However, the real estate companies were apparently unable to fill the rooms.

In January, Smart Days stopped payments of the returns to about 700 investors, many of whom made the investment through loans from Suruga Bank, based in Numazu, Shizuoka Prefecture.

The man who visited the Tokyo branch felt something was not right when a real estate agent asked him before a contract was signed to open an Internet bank account because the agent wanted to inflate the man’s savings account figure.

The man refused because he did not want to be part of such a scam. He did, however, turn over his savings book from a major bank.

Little did he know that the book would be copied and rewritten to inflate his assets.

In many cases, negotiations over loans for the investments were handled exclusively by the real estate agent who, in turn, provided copies of financial statements to the lending bank. But some of those documents appear to have been altered before the bank saw them.

In some cases, the savings balance was inflated tenfold. Other entries indicated that the potential investor had transferred a hefty down payment to the real estate agent.

Many of the investors only realized that their financial statements had been altered when they consulted with Suruga Bank about changing their repayment conditions.

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In response to questions from The Asahi Shimbun, some real estate agents admitted that such fabrications existed. But no one would provide a specific explanation about the fabrications or mention who was involved in such acts.

Some agents said it was not worth it for them to fake the documents because they received only a few percentage points as a commission for closing the deal.

“We cannot respond to questions about negotiations between financial institutions and our investors,” an official with Smart Days said.

A Suruga Bank official said the loans for share house projects were extended because the sector was promising and the plan involved investments in real estate for a return.

The official acknowledged that falsifications were discovered in some cases after the loan had been approved, but added that such acts could never be allowed regardless of whether the bank itself was at fault for not catching the manipulation of the documents.

(This article was written by Tomoya Fujita and Satoshi Kubo.)