Now the 24-year-old has been arrested, police said Thursday, after admitting having spent most of the money that was intended as pandemic relief for low-income households.
Taguchi, an unemployed resident of the town of Abu in western Japan, is being held on suspicion of computer fraud, according to Yamaguchi prefectural police.
The case has caused a stir beyond the small town, drawing media attention and outrage.
The funds were Covid-19 subsidies that were deposited into Taguchi's bank account in April. Each of the 463 low-income households in Abu, which has a population of just 3,372, was supposed to receive $780.
But a town official mistakenly submitted a single transfer request of the total amount to Taguchi, whose name was the first on the list of recipients, Kyodo News reported.
Taguchi had allegedly refused the town's request to return the money, police said, leading town authorities to sue him.
Taguchi’s arrest was based on his alleged transfer of 4 million yen ($31,300) into an account believed to be an online gambling site. Police declined to say how much of the money he actually gambled away, though they said he told them that it was most of it.
Taguchi’s lawyer told Japanese broadcaster TBS News that "all the money transferred was used up at overseas online casinos.” He said his client was sorry and hoped to return the money in incremental amounts.
Town officials are separately investigating how the erroneous transfer went through unnoticed, a mistake that has triggered a wave of criticism from residents.
Abu Mayor Norihiko Hanada on Thursday told reporters that the arrest is a step toward tracing the money and that he hoped it is recovered in full.