Tokyo Metropolitan Police arrested Takanori Kikuchi, a former executive at GungHo Online Entertainment, on Wednesday following an investigation into alleged embezzlement. Kikuchi, who previously headed the company's systems division, has admitted to the charges.

According to GungHo's statement, Kikuchi misappropriated roughly 246 million yen (approximately $1.675 million USD) over several years through a scheme involving fictitious business orders. Operating as a contractor through a third-party work-matching service, he created fake outsourcing arrangements that resulted in an additional 100 million yen ($681,000 USD) in improper payments to a business partner despite no actual work being performed.

The company filed criminal charges against Kikuchi in October 2025, but kept the arrest quiet to avoid interfering with the police investigation. GungHo had previously announced in August 2025 that it dismissed an executive-level employee for embezzlement that occurred in July 2025, though the company didn't name Kikuchi at that time.

Following the discovery, GungHo established an internal investigation team composed of two independent auditors to review the situation. The company says it's now implementing additional safeguards, including expanded compliance education and training programs to prevent similar incidents.

The arrest comes amid recent leadership changes at GungHo. CEO Kazuki Morishita stepped down in February 2026, with CFO Kazuya Sakai taking over as the new CEO, President, and Representative Director.

GungHo Online Entertainment operates several major gaming titles, including the popular puzzle game Puzzle & Dragons, the MMORPG Ragnarok Online, and other games like TEPPEN, Ninjala, and Disney Pixel RPG. The company's focus on strengthening internal compliance reflects broader efforts across Japanese gaming companies to maintain financial transparency and corporate accountability.