Since March of last year, Tatsuya Kimura, 30, managed a club in the red-light district of Kabukicho that lacked a license under the adult-entertainment law.
Police also arrested two other persons affiliated with the parlor.
Kimura had previously been cited for heading a fraud ring that collected more than 100 million yen via bank-transfer scams connected to usage of an adult Internet site, according to TV Asahi (Mar. 14).
Police suspect that the money obtained from fraud victims was used to compensate for financial difficulties experienced by the hostess club.