GungHo Online Entertainment, the Japanese developer best known for Puzzle & Dragons, has accused a former senior executive of orchestrating a sophisticated embezzlement scheme that misappropriated more than ¥346 million (approximately $2.35 million USD) in company funds.
A Long-Running Internal Fraud Uncovered
In an official statement released on August 14, GungHo revealed that it had uncovered a case of “malicious and independent” fraud conducted by one of its top-ranking former employees. According to the company, the individual used their position of authority to issue fictitious work orders and approve payments for non-existent projects over a period of several years.
The statement claims the executive “engaged in misconduct,” specifically citing “the misappropriation of company funds through the placement of fictitious work orders,” as translated via Google.
An internal investigation confirmed that approximately ¥246 million (around $1.67 million USD) was siphoned by funneling payments through a third-party job-ordering service. The company stated that these work orders falsely listed GungHo as the client and the executive as the contractor.
Additionally, another ¥100 million ($680,000 USD) was allegedly lost through fraudulent outsourcing payments made to a business partner, despite “no work actually being performed.”
After suspicions of irregular financial activity surfaced, GungHo launched an internal investigation backed by independent forensic experts and external legal and accounting firms. This included digital forensics of the devices used by the employee, as well as interviews with involved parties.
As a result, the executive in question was terminated for disciplinary reasons on July 24, 2025. GungHo emphasized that the employee “engaged in cover-up efforts to avoid detection” and acted independently, abusing their discretionary authority within the company.
Legal Action Underway
GungHo is now working closely with law enforcement, confirming that it is in “concrete discussions regarding the acceptance of charges against the former employee” and is “fully cooperating with the investigative activities of the investigative authorities.”
The company also noted that, due to the active nature of the investigation, it will not release further details at this time to avoid “potential hindrance to the investigative activities.”
Beyond the immediate legal response, GungHo has formed a dedicated internal task force led by two external auditors, supported by the same forensic experts, to assess whether similar misconduct occurred elsewhere. The team is also focused on “analyzing the causes” of the fraud and “formulating measures to prevent recurrence.”
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