A Japanese tax official was arrested over his alleged involvement in a fraud ring that recruited 200 people to steal $1.5 million of Covid-19 aid, media and police said Thursday.

The 24-year-old and his friends are accused of convincing people to apply for government subsidies for business owners through deception, according to public broadcaster NHK and other outlets.

They reportedly lured around 200 participants -- mostly university and high-school students -- through a messaging app, promising that the money would be invested in cryptocurrency.

A Tokyo police spokesman told AFP a "24-year-old public servant" was arrested Wednesday "for fraudulently obtaining money under the name of virus subsidies", along with a 22-year-old who worked for an unnamed company.

Reports said the alleged fraudsters had stolen a total of 200 million yen ($1.54 million)
Reports said the alleged fraudsters had stolen a total of 200 million yen ($1.54 million) AFP / Behrouz MEHRI

Reports said the alleged fraudsters are suspected of stealing a total of 200 million yen ($1.54 million), but the initial arrests are for a smaller amount of around one million yen, with the rest under investigation.

Five other people, all in their 20s, have also reportedly been arrested over the case.

The scheme's mastermind may still be on the loose, however, with police chasing a man in his 30s who left Japan for Dubai in February, according to the Yomiuri Shimbun daily.

It is not the first time Japan has seen scandals over financial aid for people struggling during the pandemic.

Last month, a man given $360,000 in error was arrested after saying he gambled away the money online, while this week, three family members were reportedly arrested for illegally receiving 960 million yen in Covid-19 aid. The father is on a wanted list after fleeing to Indonesia.