Thursday February 5, 08:55 AM
Japanese man arrested over 1.4-bn-dlr investment scam
By Miwa Suzuki
TOKYO (AFP) - Japanese police on Thursday arrested a business executive who built a cult-like status among thousands of investors whom he reportedly defrauded of at least 1.4 billion dollars.
Kazutsugi Nami, chairman of now bankrupt bedding supplier L&G K.K., had promised 36 percent annual returns. His company even issued its own electronic money, which he predicted would be a hit during the global economic crisis.
Many of the victims were elderly people, who initially bought everything from vegetables to futons with the currency and would attend promotional fairs set up by the 75-year-old Nami.
The arrest comes two months after US broker Bernard Madoff was arrested and charged with using billions of dollars from new investors to pay off older ones in a pyramid scheme.
Soon before his arrest, Nami told a swarm of reporters and camera crew that he had done nothing wrong.
"Please shoot the face of 'the con man unmatched in history,'" he said sarcastically. "Time will tell if I'm a con man or swindler."
Nami swindled 37,000 investors out of a total of 126 billion yen (1.4 billion dollars), the Jiji Press news agency and public broadcaster NHK said, quoting investigation sources.
Some other media estimated the alleged scam could have been worth as much as 226 billion yen.
A police spokesman said Nami and 21 other people had been arrested but declined to confirm the overall size of the suspected fraud.
Nami remained unrepentant as he had breakfast at a local restaurant.
"I'm leading 50,000 people. Can they charge a company this big with fraud?" he said, having a large glass of beer.
Asked if he was sorry for his investors, he replied: "No. I have put my life at stake."
"Why do I have to apologise? I'm the poorest victim. Nobody lost more than I did. You should be aware that high returns come for high risks," he said, before being led away by the police.
Nami's company introduced its own electronic money, which was fed into investors' cellphones and used to buy items including food, jewellery and clothes at bazaars and online shops.
The money was called "enten", apparently a combination of the Japanese words for the yen currency and paradise.
People who put up cash one time for the company got the same sum of enten in exchange every year, making them feel that their money would never disappear even if they spent it.
Hajime Chiba, who heads a group of lawyers assisting nearly 900 of the victims who had come forward after becoming suspicious of the scheme, said they were now seeking legal measures to get their money back.
But he said that many more victims had not come forward.
"Since they got involved through solicitation of their friends, they seem to be afraid of being left out if they pull themselves away from the group and ask for legal help," Chiba told AFP.
One elderly woman had been defrauded of more than 100 million yen, he said.
The NTV network aired footage of an "enten fair" where participants sang the praises of the investment plan.
"Enten life is wonderful," a woman said. Another woman said: "It's like a dream, I can buy anything."
Nami appeared convinced of his comeback.
"Because of the financial crisis, countries will adopt the enten in three years' time. I will start shining and become world famous. I will certainly move the world," he said before his arrest, as quoted by Jiji Press.
The agency quoted a 65-year-old woman who lost 30 million yen saved over four decades as saying: "I thought the company was fine as it was in business for a long time." L&G -- standing for Ladies and Gentlemen -- was set up in 1987.
"I had fun and a lively life... I was stupid. It's my fault as I was greedy," another woman, 70, said after her two million yen became irrecoverable.
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