A post office employee used this surprising strategy to embezzle over $700K

A former post office employee has been arrested for embezzling in a rather unexpected way: by reselling stamps. And this event — reported by Kyodo News — is not an odd one-off. In fact, the Japan Post Co. has been experiencing hiccups in the system through this odd loophole for almost six years, possibly more, adding to their laundry list of recent scandals.

What happened?

Before January of 2021, one could go to a post office in Japan and use prepaid postage in bulk that is marked with an ink stamp rather than a sticker stamp. However, sticker stamps are discarded in the equivalent amount and marked for shredding. Through three fiscal years ending in March of 2017, the Japan Post Co. failed to report these sticker stamps as income, so while protocol indicated that they should be discarded, postal workers were able to take the unaccounted-for items and resell them for a little extra cash.

This is just what a 49-year-old Tokyo resident, and former employer, of the Japan Post Co. Masaki Hosohata, did.

Over the course of 11 months, from April 2016 to March of 2017, Mr. Hosohata was purposed to have sold 2,012,500 prepaid-postage stamps valued at around 94 million yen, equivalent to $889,500 USD. He reportedly sold these stamps at discount ticket shops for a profit of about 75 million yen, about $709,709 USD.

Discount ticket shops, also known as Kinken shops, are Japan’s best-kept secret; much like ticket resale websites in America, discount ticket shops are known to sell items of all kinds. Their wares can range from shinkansen (bullet train) tickets, department store vouchers or concert tickets, to coupons and stamps. They are not illegal enterprises, and are often invaluable to travelers, though some tickets or items have restrictions or exclusions, like off-peak train tickets.

Mr. Hosohata, who visited discount ticket shops over 100 times over the course of his year of embezzlement, was fired from the Japan Post Co. in August of 2018. However, criminal charges were not pressed until November 2020. Japan Today reports that Mr. Hosohata was involved in other cases, but did not specify his history of offenses.

The outcome

If prosecuted for the charge of embezzlement, the penal code for financial crime in Japan indicates that Mr. Hosohata could face up to imprisonment with labor for up to ten years. Neither Japan Post Co. nor its parent company, Japan Post Holdings, has released a statement about the crime.

Unfortunately, this isn’t the only occurrence of embezzlement occurring in the Japan Post Co. Just two years ago, in October of 2019, YC News reported that 56-year-old Yasuhio Kawasaki, former Minister of General Affairs of an Osaka Prefecture post office, was suspected of embezzling stamps as well. Mr. Kawasaki was fired in December 2020, after a July 2020 investigation into his actions by the Japanese tax authorities.

The stamps embezzled by Mr. Kawasaki were worth an estimated 133 million yen ($1.4 million USD), and were sold for 122 million yen ($1.1 million USD).

In 2019, Japan Times reported that a similar situation occurred in both the Kanda Prefecture post office and the Shiba Prefecture post office. In 2018, an unnamed executive at the Kanda office embezzled over 440 million yen ($4.1 million USD) in stamps. Another executive at the Shiba office offloaded more than 140 million yen in stamps ($1.3 million USD). It wasn’t reported if these perpetrators also sold their stamps to Kinken shops, but a Japan Post official verified in a statement that the “inappropriate handling of stamps” had taken place.

Though it may seem like simple greed driving postal workers like these postal workers, Mr. Hosohata’s admission of his motives gives a more nuanced insight. When questioned by authorities, he told investigators, “I thought it was a waste to discard the stamps.”

This investigation casts a shadow over the already problematic recent dealings of the Japan Post Co. In 2019, it was uncovered that over years, over 183,000 fraudulent insurance policies had been sold to unsuspecting customers over the course of five years. In April of 2020, when more details emerged about the sales of these policies, 75 post office workers had their insurance sales privileges revoked.

“In about 70,000 of those cases,” the Wall Street Journal reports, “customers appear to have been charged premiums twice when they changed their insurance policy.” Additionally, “in 19,000 cases policyholders were unable to switch to a new policy after canceling a previous one, it said.” 70% of those scammed by the policies were over the age of 60.

This enormous scandal led to the resignation of the CEO, Masatsu Nagato, along with the heads of the postal and insurance branches, on Jan. 5th, 2020. They were promptly replaced with former government workers. Japan Post Holdings Co. was formerly under the conservatorship of the Japanese government, and though they’ve made an extended effort to privatize the nearly $2.5 trillion company, the government still has a majority share, hovering around 57%.

It wasn’t until August of 2020 that the Japan Post Insurance Co. resumed the sales of insurance policies in an attempt to regain the trust of their customers. Unfortunately now, with issues emerging in the Japan Post Co.’s system as well, it’s hard to tell whether that trust will ever be rebuilt.