Japanese prosecutors arrested three former executives of cosmetics firm Kanebo on Friday for alleged fraud.
The troubled firm is currently being managed by the state-backed Industrial Revitalisation Corporation of Japan.
The charges facing the three executives, including former president Takashi Hoashi, are that the firm hid debts for five years to March 2003.
In April, the Japanese cosmetics giant said profits had been inflated by $1.37bn (£723m).
Tokyo prosecutors said in a statement they had arrested former president Takashi Hoashi, former vice president Takashi Miyahara and former executive Kenzaburo Shimada.
The investigative committee involved in the probe is now reported to be trying to track down 215bn yen (£1.1bn; $1.9bn) in fraudulent accounting.
It also suspects Mr Hoashi and some other former executives raised about 250m yen between May 1999 and early 2002. The committee wants to know what it was used for.
If found guilty of the charges for which they were arrested on Friday, the trio could face a maximum penalty of five years imprisonment, a fine of up to 5m yen, or both.