[Summary]
On May 13, 2026, multiple media reported that the former representative of medical company MTU was arrested by the Metropolitan Police Department on suspicion of defrauding an investment company of approximately 1.63 billion yen.
According to media reports, there are suspicions that MTU's business performance, sales, and track record of implementation at medical institutions are different from the actual situation. On the other hand, the former CEO is reportedly denying the charges, and this article will summarize the points at issue regarding risk management in investment and M&A based on current reports and publicly available materials.
The biggest lesson from this incident is that in startup M&A, it is necessary to verify not only submitted materials and media exposure, but also the existence of customers, sales, products, and production environments through independent channels.
First, the conclusion
The MTU/J-STAR incident was not just an individual case of suspected fraud, but also highlighted weaknesses in due diligence in startup investment and M&A.
The following three points are particularly important.
| Issues | Implications for investment/M&A |
|---|---|
| Verification of existence | Customers, sales, and service usage should not be confirmed solely through the target company |
| Media trust | TV, commercials, and PR articles are not proof of business reality |
| Technical DD | Checking the production environment, logs, code, and usage status is important for AI/IT companies |
In growth themes such as AI, medical DX, and cybersecurity, it is easy for investors to have a mentality of not wanting to miss out on the deal.
However, the stronger the theme, the more you need to calmly confirm the reality of the business and the backing of its earnings.
Summary of the incident
According to reports, Takuya Hara, the former representative of the medical company MTU, is suspected of giving false explanations about MTU's business performance and sales to the investment company J-STAR from around December 2024 to February 2025.
TBS NEWS DIG reports that Hara explained that the estimated sales for 2024 are approximately 800 million yen, and is suspected of having defrauded approximately 1.63 billion yen by selling MTU.
Additionally, while the same report explained that MTU's service had been "introduced to approximately 50 medical institutions," it was said that in reality, no medical institutions had introduced the service.
FNN Prime Online reports that the suspect Hara denies the charges, saying, ``I did not do anything that could be called fraud.''
At this point, the matter is at the arrest and suspicion stage, and the final determination of the facts will be left to future investigations and judicial proceedings.
J-STAR acquisition announcement and subsequent doubts
J-STAR announced its capital participation in MTU on March 3, 2025.
In the published materials, MTU is described as a company that provides cybersecurity support for medical institutions.
However, subsequent reports state that Hara was dismissed as representative director on April 9, 2025, after the acquisition, as ``serious doubts had arisen regarding the execution of business.''
In other words, within a short period of time after the acquisition was announced, serious problems regarding the actual business conditions of the investee have surfaced.
This timeline shows the importance of not only pre-closing DD in M&A, but also the 100-day plan, PMI, and internal control confirmation immediately after closing.
Media exposure is not proof of credibility
A major point of contention in this case was media exposure such as television and commercials.
Several reports have pointed out that the TV exposure of MTU and its former president may have influenced trust formation.
Furthermore, on the night of May 15, 2026, TV Tokyo made a statement on Official X that linked the video broadcast on September 5, 2024 to an economic program, but it was reported that the video was a commercial and had no relation to the content of the program.
The important point here is that media exposure itself does not prove the existence or profitability of a business.
TV commercials, tie-ups, PR articles, and being talked about on SNS all have the effect of increasing awareness.
However, in M&A DD, these should not be confused with "third-party business verification."
Why is startup DD difficult?
The reason why startup DD is difficult is that being immature is not necessarily abnormal.
| Common situations at startups | Difficulties with DD |
|---|---|
| Investing for growth even in the red | It is difficult to tell whether a deficit is a normal investment or a failed business |
| Few customers | Appears to be a growing company even if dependent on one company or in the demonstration stage |
| KPI-centered explanation | The connection with sales and cash income may be weak |
| Product is immature | There is a big difference between demo and production |
| Much non-public information | Difficult to find out from outside |
In growth themes such as AI, medical DX, and cybersecurity, it is easier for investors to focus on future prospects.
As a result, evaluations of growth stories and marketability may come before confirmation of current performance.
If this balance is disrupted, due diligence becomes ``confirmation of investment hypotheses'' rather than ``confirmation of reality.''
4 trusts that will be tested this time
Looking at this report from the perspective of investment practice, there are at least four issues of credibility.
| Types of credit | Issues that should have been confirmed |
|---|---|
| Customer results | Has it really been introduced in medical institutions? |
| Sales results | Were invoices, payments, taxes, and contracts consistent? |
| Actual status of the product | Was the service in production and was there a usage log? |
| External credibility | Did you confuse media exposure and commercials with business verification? |
It is not enough to check just one of these four things.
For example, even if you have a customer list, if you only check with the contacts introduced by the target company, the confirmation route will be biased.
Even if you have sales documents, if you do not check them with bank deposits, contracts, tax documents, and customer payment records, it will be weak to confirm the existence of the documents.
Reality verification DD that will be needed in the future
Given the current suspicions, we believe that in addition to traditional DD, the importance of reality verification DD will increase in startup M&A in the future.
| Area | Conventional DD | Confirmation that will be emphasized in the future |
|---|---|---|
| Customer confirmation | Confirmation with the target company's proposed installation company | Headquarters confirmation through an independent route that does not go through the target company |
| Sales confirmation | Sales ledger, financial statements, management documents | Comparison of contracts, invoices, deposits, tax payments, and customer payment records |
| Technical confirmation | Demo screen, product explanation | Production environment, logs, API communication, code, operation history |
| KPI confirmation | Number of registrations, number of introductions, number of business negotiations | Active usage, retention rate, actual billing, cancellation rate |
| Credit confirmation | Media exposure, partnership announcement | On-site investigation, third-party hearing, anti-social/fraud investigation |
Especially in AI/IT companies, the role of technical DD becomes more important.
You need to check not only the documentation but also the production environment and logs to determine whether the service is actually running, whether customers are using it, and whether data is being generated.
Implications for the investment market
This incident may also affect investment attitudes toward unlisted startups and AI-related companies.
Going forward, investors will look more closely at the following points:
- Can customer performance be independently verified?
- Are sales and payments consistent?
- Is the product being used in production?
- Are the KPIs linked to actual billing and continued usage?
- Is media exposure overestimated as a credit enhancement?
While this creates a difficult environment for startups, it can also be a positive for established companies.
This is because companies that can transparently demonstrate the backing of their business, customers, sales, and technology are more likely to gain the trust of investors.
Lessons for individual investors
This incident is not just a problem for PE funds and the M&A industry.
The same structure exists for individual investors.
This is because if you make investment decisions based solely on hot topics, TV exposure, comments from celebrities, and reputation on social media, it is easy to put off checking the facts.
The points that individual investors should keep in mind are as follows.
| Points to watch | How to check |
|---|---|
| How does the company make money? Financial results briefing materials, securities reports, company website | |
| Are sales based on actual demand? | Customers, contracts, retention rate, unit price |
| Is profit coming from the main business? | Operating income, operating CF, extraordinary profit and loss |
| Isn't this theme a priority? | Separately check the stock price material and the contribution to business performance |
| What are the worst-case scenarios | Risk information, competition, regulation, financial burden |
What is important when investing is not just whether you have a dream.
It's about making sure that the sales, customers, technology, and cash income to support that dream really exist.
Summary
The MTU/J-STAR incident is currently at the arrest and suspicion stage, and the final decision will be left to the judicial process.
However, from the perspective of investment/M&A risk management, there are already significant lessons learned.
Even if you have a growth theme, media exposure, implementation results, and sales materials, that alone does not prove the reality of your business.
What will be important when investing in startups in the future is not the story but the reality.
Are there really customers?
Are the sales actually credited?
Is the product actually being used?
The ability to independently confirm these three points will likely become the core of M&A due diligence.
Source
- TBS NEWS DIG "The former president of a medical startup (38) was arrested on suspicion of fraud after defrauding a fund company of over 1.6 billion yen on the pretext of selling the company after lying about ``sales of about 800 million yen.'': https://newsdig.tbs.co.jp/articles/-/2657125?display=1
- FNN Prime Online "Former president of a medical startup arrested on suspicion of defrauding an investment fund of approximately 1.6 billion yen after offering to take over the company, saying it had annual sales of 800 million yen": https://www.fnn.jp/articles/-/1043917
- J-STAR Co., Ltd. “About capital participation in MTU Co., Ltd.” (March 3, 2025): https://www.j-star.co.jp/wp-content/uploads/2025/02/20250303_MTU%E6%A0%AA%E5%BC%8F%E4%BC%9A%E7%A4%BE%E3%81%B8%E3%81%AE%E8%B3%87%E6%9C%AC%E5%8F%82%E5%8A%A0%E3%81%AB%E3%81%A4%E3%81%84%E3%81%A6.pdf
- Livedoor News “TV Tokyo makes a statement regarding the arrest on suspicion of fraud, ``It has nothing to do with the program content'': https://news.livedoor.com/topics/detail/31285628/