According to a report in Nikkei, Index Corporation chairman Masami Ochiai and his wife, Index president Yoshimi Ogawa, have been arrested by authorities in Tokyo, Japan on allegations that they falsified earnings reports. In case you don't know, Index Corporation owned Atlus at one time, but was bought and split from the publisher of Tactics Ogre, Disgaea, Steambot Chronicles, Trauma Center, the Persona series, and many other popular Japanese games. The company was bought by Sega in September 2013 in a deal that cost the company an estimated $140 million.
The Ochiais were arrested on fraud charges for allegedly overstating sales to produce a net profit of 240 million yen for the year to August 2012, attempting to hide the fact that the company was insolvent at the time with a net loss of some 600 million yen after remaining in the red for five years on end. Index is alleged to have carried out "circular transactions with trading partners to artificially inflate their sales."
Prior to the arrest, chairman Ochiai denied the allegation in an interview with Kyodo News. Before the arrests, the Securities and Exchange Surveillance Commission raided the company's Tokyo head office and chairman Ochiai's house over the suspected scheme to overstate sales. Last month, the court cancelled rehabilitation procedures for Index, leading the company to launch bankruptcy procedures.
Source: Nikkei by way of Andrew Eisen.