Yasunori Kagoike, the former head of scandal-hit, nationalist school operator Moritomo Gakuen, was arrested on Monday over allegations that he and his wife defrauded the government and received public subsidies to construct an elementary school.
Moritomo Gakuen and its former head first came under the spotlight for purchasing state-owned land to build the school for just a fraction of its appraisal price.
The unfolding scandal has implicated Prime Minister Shinzo Abe and his wife, Akie, who was supposed to become honorary principal of the planned school.