The angel tax system is not a get-out-of-jail-free card
It was an investment using the angel tax system.
Hearing this single remark might give the impression that it is a safe system approved by the administration, and that the fundraising conducted using that system was naturally lawful as well.
However, there is a big catch here.
The Angel Tax System is a system that provides tax incentives for individual investors who invest in certain startup companies. It is neither a system that guarantees the principal of the investment itself, nor is it a system in which the government guarantees the legality of the solicitation contents.
Check the National Tax Agency's "Overview of the Angel Tax System"
Rather, the National Tax Agency has even established special provisions for angel tax system-eligible shares, such as when a loss arises from their sale or when the shares themselves lose their value due to the bankruptcy of the investee company.
In other words, true angel investing carries the risk that the invested money may not be returned.
Now, regarding that stock investment, what would happen if the actual solicitation included explanations such as "the money will eventually be returned," "you won't lose money," or "it can be recovered in another way"?
Furthermore, if that investment decision was further encouraged by a combination of factors—such as the results of inquiries to government agencies, the professional title of a certified public accountant, and even the credibility of being the management team of a listed company—
Only then do two issues completely unrelated to tax law come to light: investment fraud and violations of the Investment Act.
There is no independent criminal charge called investment fraud.
First, I will organize the legal aspects.
Actions commonly referred to as investment fraud are often considered under Article 246 of the Penal Code for the crime of fraud.
Typically, the structure involves making false statements about facts important to an investment decision, causing investors who believed those statements to fall into error, and as a result, delivering money.
Therefore, simply the fact that the performance of the investee company worsened, the stock price dropped, or the business plan failed does not naturally constitute fraud.
The issue is what was explained at the time of receiving the investment.
It was explained that a business that does not actually exist exists. It was explained that the money would definitely be returned even though there was actually no repayment ability. It was explained that "the government approves it" even though administrative agencies have not approved individual cases. It was explained that "it has the endorsement of a certified public accountant" even though experts have not verified it.
If such significant falsehoods prompted investment decisions and led to the disbursement of funds, the issue of criminal fraud arises.
And the Investment Act regulates fundraising from a different angle than fraud.
Article 1 of the Act on Regulation of Receiving of Contributions, Receipt of Deposits, and Interest Rates prohibits any person from accepting funds from an unspecified and large number of persons by explicitly or implicitly indicating that the full amount of the contributed funds or an amount exceeding it will be refunded at a later date.
This is extremely important.
The crime of fraud and Article 1 of the Investment Act are not the same thing.
For example, even if the company truly exists, genuinely conducts business, and actually issued shares, if funds were collected from the general public while promising during the solicitation that "the entire investment amount will be returned," issues under the Act Regulating the Receipt of Contributions, Deposit Interest Rates and Unlawful Financial Transactions (Investment Act) will still remain separately.
Conversely, even if there was no explicit promise to return the principal, the crime of fraud may still become an issue if funds were obtained by making false statements about important matters, such as "the government has individually approved this project" or "this company has solid assets."
And if both false explanations and the promise of principal return existed, there is room for consideration under both the crime of fraud and the Act Regulating Receipt of Contributions, Interest Deposits, and Interest Rates.
Naming it the Angel Tax System doesn't mean the principal guarantee disappears.
The most important thing in this matter is not to focus solely on the formal aspect that "it was a share acquisition utilizing the angel tax system."
In real stock investing, while investors profit from a company's growth, they also bear the risk of a decline in stock value and, in the worst case, the loss of their investment amount.
However, if a mechanism was shown whereby, while taking the form of a share acquisition, the invested amount could actually be recovered from the beginning through another contract, buyback, consulting fees, refunds from third parties, or other methods, then the external appearance and the reality would diverge.
What you need to check is not just whether the four characters for "principal guaranteed" are written in the contract.
Article 1 of the Interest Rate Restriction Act also applies when the refund of the full amount or more is "implicitly indicated."
In the end, everything goes back.
We will have them buy the stock, but we can recover the money later.
It is a system where you only take the tax benefits and get your original money back.
I will return the same amount under a different contract.
Whether such explanations were provided before the investment is of utmost importance.
Were Mr. Takuoki Nakano's "Nakano Memos" a source of reassurance, or were they a tool of deception?
According to information obtained by the Last One Mile Labor Union, Mr. Toshiyuki Nakano showed those around him a so-called "Nakano Memo," which organized inquiries to administrative agencies and their responses, and explained the legality of the mechanism for utilizing the angel tax system.
There is nothing wrong with contacting the administration itself.
Rather, if he had checked the complex tax system in advance and accurately communicated those answers to the investors, that could even be a circumstance favorable to Mr. Tamaki Nakano.
The issue is what was actually asked of the administration, what the administration replied to, and how that reply was explained to investors.
For example, if the administration merely gave a general response stating, "The Angel Tax System can be used if certain requirements are met," but the explanation given to investors was that "this scheme has been approved by the administration" or "even this method of returning funds is recognized by the national government," then that is a completely different story.
If they had cut out only a portion of the administrative response and used it as if official approval had been granted for the entire individual transaction without informing the administration of the actual transaction terms, the memo itself may have served as material that misled investors.
Conversely, if the questions and answers were published in the Nakano Memo exactly as they were originally written, and all actual transaction conditions were also reported to the administration, that should be made clear as well.
All that is needed is not just the "Nakano Memo".
It is to align side-by-side the original inquiry actually sent to the government, the attached documents, the original government response, the response date and time, the in charge department, and the explanatory materials distributed to investors.
That alone makes it quite clear whether the "administrative confirmation" was truly a source of reassurance, or if it was fabricated material used to build trust.
Satoshi Saito's presence carries a different weight from that of a regular sales representative.
Another figure of extreme importance from the perspective of building investor trust is Satoshi Saito.
According to his publicly available background, Satoshi Saito is a certified public accountant and assumed the position of General Manager of Corporate Planning at Last Mile Inc. in August 2020.
According to information received by our union, there are materials and testimonies stating that Mr. Satoshi Saito pioneered the use of the system himself, explained it to other investors, was involved in sales and introductions, and even provided follow-up during the remittance of investment funds, which is also documented in the so-called Mamizuka Memo.
If these are facts, it has a different meaning than merely being introduced by an acquaintance.
It is natural for average investors who are not well-versed in tax and accounting to trust the expertise of a certified public accountant when they are told that there are no issues.
Moreover, if a certified public accountant explains that they themselves are using the same system, it serves as an extremely strong reinforcement of trust, implying that since the expert is using it too, it must be fine.
Therefore, what needs to be confirmed regarding Mr. Satoshi Saito is not simply who he introduced.
What was explained?
Did you know about the possibility of the principal being returned?
Did they accurately understand the scope of the administrative response?
Did you present your professional judgment as a certified public accountant to the investors?
And the question is whether the investor provided funds based on that explanation.
If they were using the title of Certified Public Accountant to reinforce credibility, issues of professional ethics are also unavoidable.
The Japanese Institute of Certified Public Accountants explains that certified public accountants are required to maintain their dignity at all times, perform their duties fairly and faithfully, and are prohibited from engaging in acts that would damage their credibility.
Therefore, even apart from criminal liability, if Satoshi Saito explained the safety of the investment to investors by leveraging his credibility as a certified public accountant while recognizing problems regarding the reality of the investment and the mechanism for recovering the principal, issues concerning professional ethics and acts that discredit the profession as a certified public accountant would also be considered.
Of course, simply being a certified public accountant does not mean that one is responsible for the outcome of an investment.
However, if the fact that "they were trusted because they were a certified public accountant" is combined with the fact that "the certified public accountant personally and actively participated in fundraising," the impact that professional qualification had on investors' decision-making cannot be ignored.
And is the information that Makoto Watanabe was at the very top of the hierarchy actually true?
Now, here is a problem by Makoto Watanabe.
Makoto Watanabe is currently the Chairman and CEO of Last One Mile, Inc.
Check the executive introduction of Last One Mile Inc.
According to information received by our union, suspicions have been raised that Makoto Watanabe may have been exercising practical direction or management over the series of operations, sales, and fundraising activities conducted by Mr. Toshiyuki Nakano and Mr. Satoshi Saito.
This point has not yet been established as a fact by the court.
Also, the mere fact that Makoto Watanabe was the representative of Last One Mile does not mean that he bears criminal responsibility for all the actions of Tsuyoshi Nakano or Satoshi Saito.
However, if Makoto Watanabe had been giving specific instructions regarding the system design, sales methods, explanations to investors, principal recovery methods, and exit strategies even before the fundraising began, the assessment would change completely.
Principal offender in a conspiracy, instigation, and aiding and abetting are distinct concepts.
This needs to be legally divided with precision.
Article 60 of the Penal Code defines joint principal liability in cases where two or more persons commit a crime together.
Article 61 of the Penal Code stipulates instigation when a person causes another to form the intent to commit a crime and execute it, and Article 62 stipulates accessoryship when a person aids in the execution of a crime.
Depending on the extent of Makoto Watanabe’s involvement, it will determine whether he is a co-principal, an instigator, an accessory, or whether his involvement was insufficient to warrant criminal liability.
For example, if it is proven that the three of them shared the purpose and method of fundraising in advance, with Makoto Watanabe overseeing the entire operation, Toshiyuki Nakano explaining it using government responses, and Satoshi Saito reinforcing credibility as a certified public accountant, and that each divided roles to obtain funds from investors, there is room for the issue of joint principal offender to arise.
Even if Makoto Watanabe himself did not explain things directly to the investors, if he decided to have the crime committed by giving instructions such as "Raise funds using this method" or "Give this explanation," it becomes an issue of instigation.
If, while the other two had already decided to carry out the act, you provided them with a customer list, a sales network, company facilities, explanatory materials, and a system for collecting funds, the issue of aiding and abetting would be considered.
In other words, looking only at who was sitting in front of the investors doesn't give you the whole picture.
We need to determine who was behind the planning, who gave the orders, and who carried them out.
If the claim that “we specialize in M&A” is to have any meaning in this case, then...
Information has also been brought to our union that Mr. Makoto Watanabe has strongly spoken about his own capabilities regarding M&A and corporate management.
Of course, there is nothing wrong with being knowledgeable about M&A itself.
There is nothing wrong with using the PL to build up business performance.
The problem arises when that knowledge was used to create an "exit" for this case.
For example, if an exit strategy had been designed in advance to ultimately recover the investment amount—such as through a sale to another company, business transfer, share buyback, intercompany transaction, or other methods after having investors acquire shares—that exit strategy is also connected to the issue of principal repayment under the Investment Deposit and Interest Rate Control Act.
Furthermore, if explanations such as “the investment can ultimately be recouped through M&A,” “the deal is backed by the management of a publicly traded company,” or “an exit strategy for the business has already been mapped out” were used to reassure investors, the content of those explanations is also important.
Were you really aiming for M&A as a truly rational business plan?
Or was the plan, from the outset, to use M&A and other transactions as a mechanism to recoup the investment capital, while maintaining the outward appearance of a stock investment?
This is a significant difference.
If the title of listed company representative was used, even more careful verification is required.
The mere fact that Mr. Makoto Watanabe is the representative of a listed company is, of course, not illegal.
However, it would be a different matter if that title had been used to bolster credibility in a personal fundraising effort.
"It's reassuring because executives from publicly traded companies are involved."
"Makoto Watanabe is watching from behind."
This is a project involving the management of Last Mile.
Were such explanations actually given to investors?
More importantly, whether Makoto Watanabe himself recognized, approved, or directed such use of credit remains to be seen.
Just using a true title does not make it fraud.
However, even if the company is not involved, if it gives investors the misconception that the listed company is supporting or guaranteeing the transaction, and causes them to hand over money based on that credit, the way that title is used is relevant to the assessment of fraudulent acts.
If the social credibility of being a listed company representative was exploited, the investors' tendency to trust it would be far stronger than in the case of an investment pitch by an ordinary, unknown promoter.
In civil law, the responsibility of the last mile itself is also considered separately.
Apart from criminal liability, it is also necessary to consider the civil liability of Last One Mile Inc. itself.
Article 715 of the Civil Code provides for employer liability in cases where an employee inflicts damage on a third party in the execution of their business.
Therefore, if Satoshi Saito and other related parties were conducting investment sales as last-mile operations, or in a manner that was outwardly closely related to those operations, there is room for the company's employer liability to become an issue.
On the other hand, regarding Mr. Toshiyuki Nakano, it is necessary to separately confirm what kind of employment, delegation, outsourcing, or de facto command-and-supervision relationship existed between him and Last One Mile at that time.
Merely being an acquaintance of Mr. Makoto Watanabe does not lead to employer liability under Article 715 of the Civil Code.
However, if multiple people jointly commit a tort, Article 719 of the Civil Code regarding joint torts applies, and those who instigate or aid the act may also be treated civilly as joint tortfeasors.
In other words, not only will the company's employer liability be considered, but another route involving the joint tort liability of each of the three individuals will also be examined.
Were company emails, customers, meeting rooms, and titles used?
What is necessary when considering the responsibility of the last mile is not abstract human relationships.
It is what was actually used.
Were any last-mile email addresses or phone numbers used to contact investors? Were explanations given in company conference rooms? Were business partners or employees of the company targeted for solicitation?
Were company customer information, sales networks, employees, expenses, transportation costs, and document creation environments not being utilized?
And above all, whether the collected funds or the profits generated from those funds were not flowing to Last One Mile, Mr. Makoto Watanabe, or their related parties.
Only after checking this far can you distinguish whether it was a "personal investment story" or a "business utilizing the company's credit and sales foundation."
The possibility that each of the three was in charge of a different credit device
Assuming that the information submitted to our union is supported by objective evidence, this case reveals an extremely distinctive division of roles.
Mr. Tatsuki Nakano creates a sense of security through administrative inquiries and the "Nakano Memo," assuring that public institutions have confirmed the information.
Satoshi Saito creates a sense of security, built on his professional qualification as a Certified Public Accountant and his own personal experience using the service, by having experts verify its safety.
Makoto Watanabe creates business feasibility and a sense of security regarding the exit through his corporate management and M&A capabilities, as well as his social credibility as the representative of Last One Mile.
Administration
Expert
Executive of a listed company.
If these three forms of trust were combined in a single investment solicitation, it would serve as an extremely compelling argument for the average investor.
And if the explanation that served as the foundation of that trust contained significant falsehoods, it cannot be dismissed as a mere failure of investment judgment.
The most important thing is what was said before investing.
Information suggests that currently, in the questioning of Mr. Shigenori Kanemoto and others, the point of "whether he thought the principal would be returned" is being made an issue.
However, just asking the investors "Did you think your principal would be returned?" is only half the investigation.
We must verify who created that perception.
Did Shigenori Kanemoto and other investors suddenly convince themselves, all on their own, that "all the money will be returned"?
Or were explanations given by Mr. Kakuki Nakano, Mr. Satoshi Saito, or other members of the solicitation side to make it understood that way?
Furthermore, had another person created the design for the fund recovery that served as the basis for that explanation?
The most valuable thing to check here is not the current thoughts after the arrest.
This is pre-investment communication involving LINE, email, Telegram, webinar/briefing recordings, investment materials, Excel files, contracts, side letters, and buybacks.
The words the investigative authorities should search for are extremely simple.
If the devices and cloud data of the related parties are legally preserved, the following words should be searched first.
- principal
- Refund
- Return
- Back
- Guarantee
- repurchase
- Collection
- Angel
- tax benefits
- M&A
- Exit
- Administrative confirmation
- Certified Public Accountant
Who was sending what kind of text to whom before the investment?
If you arrange those communications and the actual remittance dates in chronological order, it will become quite clear whether the investor "simply misunderstood on their own later" or whether the soliciting side "indicated the recovery of the principal."
If you consider fraud and the Investment Law separately, the perspective of the case changes.
Regarding this matter, it is necessary to distinguish between four possibilities.
The first is a case where it is truly risky angel investment, where government responses and explanations were accurate, there was no promise of return of principal, and problems simply arose as a result. In this case, it is distant from the crimes of fraud or Article 1 of the Investment Act currently being discussed, at least.
The second is cases where, although principal is not guaranteed, investors were induced to invest through important misrepresentations regarding government approval, actual business operations, the use of funds, or verification by experts. In such cases, the issue of the crime of fraud becomes central.
Third, even if there are no falsehoods in the business itself or in the explanations given to the administration, this applies when funds are collected by explicitly or implicitly promising an unspecified and large number of investors the return of the full amount of their investment or more. In this case, Article 1 of the Act Regulating the Receipt of Contributions, Receipt of Deposits, and Interest Rates becomes the central issue.
And the fourth is when false statements are made regarding important matters while simultaneously promising the recovery of the principal.
In this case, it becomes necessary to investigate both the crime of fraud and the Act Regulating Contributions.
Open questions to Makoto Watanabe, Hiroki Nakano, and Satoshi Saito regarding the last mile
- Who was the person who initially planned the institutional design, sales method, explanatory materials, and fund recovery method for the series of investments utilizing the angel tax incentive?
- Did you explicitly or implicitly explain to investors that all or close to the amount of their investment would later be returned, recovered, or bought back?
- Can you disclose the full text of the questions actually submitted to the administration as described in the "Nakano Memo" and the original text of the answers, and verify their consistency with what was explained to investors?
- As a certified public accountant, what explanations regarding legality, safety, tax treatment, or principal recovery did Mr. Satoshi Saito provide to investors, and what remuneration did he receive for his sales or fundraising activities?
- Did Makoto Watanabe instruct or advise Tamaki Nakano or Satoshi Saito regarding sales methods, fundraising, M&A, stock exits, refunds, or buybacks before or during the investment solicitation period?
- During the investment solicitation, were the company name of Last One Mile Inc., the titles of Mr. Makoto Watanabe or Mr. Satoshi Saito, company emails, office, employees, business partners, or other company resources used?
- Can you disclose the amount of funds collected from investors that ultimately moved to Mr. Takuoki Nakano, Mr. Satoshi Saito, Mr. Makoto Watanabe, Last One Mile Inc., or their respective related corporations?
- Will Last One Mile Inc.'s Board of Directors and Audit and Supervisory Committee conduct an independent investigation, free from the influence of Mr. Makoto Watanabe, regarding the potential violations of the Investment Act, fraud, employer liability, and joint torts in this matter?
If you are going after the investors, also investigate the person who created that perception.
If the current investigation is pressing investors with the question of whether they thought their principal would be returned, the investigative authorities themselves are raising a crucially important point.
If the perception that the principal will be returned is important enough to determine criminality, naturally, we must investigate who gave that perception to the investors.
Just interrogating investors and getting them to say, "I thought it would come back," doesn't complete the case.
Before those words, who explained what?
Administrative inquiry by Mr. Tatsuki Nakano.
Satoshi Saito's explanation as a Certified Public Accountant.
And did Makoto Watanabe's instructions, management, and exit strategy truly exist?
Only by going back that far can the full picture of the fundraising be seen.
If the roles of the three truly connect into one, this won't just end as a story where "the investment failed."
The angel tax system is not a get-out-of-jail-free card.
Neither the fact that an inquiry was made to the administration, nor the fact that a certified public accountant was involved, nor the fact that an executive of a listed company is related, makes individual fundraising lawful by itself.
Rather, if those three forms of credit were combined to reassure investors, we need to verify who explained what much more strictly than in a typical investment project.
Mr. Nakano TSUKI builds credibility by stating, "The administration has confirmed it."
Satoshi Saito layers on the credibility of "a certified public accountant is verifying it."
And Makoto Watanabe oversaw the entire operation, backed by his position as a business executive, his M&A and management skills, and the social credibility of being the representative of a listed company.
If objective evidence connects them to that extent, this is no longer a story about three people coincidentally being around the same investment project.
Did you pool your money together?
Did someone give instructions to the other two?
Were the company's credit and equipment used?
And above all, what were they really promising to investors?
Depending on that answer, multiple issues—such as fraud under Article 246 of the Penal Code, Article 1 of the Act on Regulation of Receiving of Contributions, Deposits, and Interest Rates, complicity under Article 60 and subsequent articles of the Penal Code, employer liability under Article 715 of the Civil Code, joint torts under Article 719, and professional ethics as a certified public accountant—may intersect around a single fund-raising effort.
The Last One Mile Labor Union does not intend to first label three people as criminals and then gather evidence to fit that conclusion.
Because that is the very "investigation based on preconceived notions" that we have repeatedly criticized the National Tax Agency and the prosecutors for.
That is precisely why it is simple.
Preserve pre-investment communications, original administrative inquiry documents, investment presentation materials, bank transfers, the shareholder registry, records related to buybacks or refunds, communications among the three parties, and Last Mile internal emails and meeting minutes, and arrange them in chronological order.
If it was a true angel investment, those records will protect the three of them.
Conversely, if funds were collected from the general public under the guise of the angel tax system by leveraging a threefold credibility consisting of the government, certified public accountants, and listed company executives while promising principal recovery, there is no need to explain again what those records signify.