From Times Online February 5, 2009
Japanese businessman Kazutsugi Nami arrested for £1bn fraud
Richard Lloyd Parry in Tokyo
Police have arrested a businessman and 21 of his executives for allegedly defrauding investors of a reported 126 billion yen (£1 billion).
Kazutsugi Nami was drinking a tankard of beer when police, accompanied by reporters, arrested him in a restaurant close to his office in Tokyo at 5.30am (local time). "It was not a fraud," he said as he was led away. "The police have destroyed my businesses . . . I am a victim of the police investigation." Asked if he felt sorry for his investors, he replied, "No! I have put my life at stake."
Police have not commented on the size of the alleged fraud but Japanese media were describing it as the country's biggest scam. According to the Kyodo news agency, Mr Nami's company, L&G, collected some 126 billion yen from approximately 37,000 people, promising them 36 per cent annual interest, despite having debts of 42.3 billion yen and only 1.4 billion yen in assets. Other news agencies reported that L&G had allegedly defrauded 50,000 investors of up to 226 billion yen.
The net had been tightening steadily around Mr Nami ever since L&G went bankrupt. The company became well known as a seller of bed linen and health products and for issuing its own virtual currency – Enten, or Divine Yen – which were stored on mobile phones and which customers could use to buy mattresses, food, clothes and jewellery at markets and in online shops.
Those who introduced new investors to the company were rewarded with commissions. In 2005, the company set up a "research institute" called the Akari Laboratory, which was registered with the Government as a non-profit organisation dedicated to the revitalisation of local economies. Famous musicians and distinguished academics performed and lectured at events organised by Akari.
It became obvious that something was wrong in February 2007 when L&G announced that dividends would be paid in Enten instead of cash. It laid off most of its employees in September of that year and its offices, as well as Mr Nami's home, were raided by the police the following month. Japanese newspapers reported at the time that he had a history of involvement in pyramid schemes.
Mr Nami was in the early Seventies the vice-president of a car parts dealer named APO Japan, which enticed 250,000 people into a pyramid scheme involving exhaust pipes. He then set up a company called Nozakku, which sold stones that, the company claimed, could turn tap water into natural water. The company went bankrupt with debts of 4.5 billion yen in March 1978 and Mr Nami was jailed for fraud.
He established L&G and became its chairman in August 1987 with executives of Nozakku. Among the goods L&G sold was a futon mattress said to boost the immune system of those who slept on it. L&G's president, Masuo Saeki, was arrested in 1987 for a separate pyramid scheme.
Kazutsugi Nami was drinking a tankard of beer when police, accompanied by reporters, arrested him in a restaurant close to his office in Tokyo at 5.30am (local time). "It was not a fraud," he said as he was led away. "The police have destroyed my businesses . . . I am a victim of the police investigation." Asked if he felt sorry for his investors, he replied, "No! I have put my life at stake."
Police have not commented on the size of the alleged fraud but Japanese media were describing it as the country's biggest scam. According to the Kyodo news agency, Mr Nami's company, L&G, collected some 126 billion yen from approximately 37,000 people, promising them 36 per cent annual interest, despite having debts of 42.3 billion yen and only 1.4 billion yen in assets. Other news agencies reported that L&G had allegedly defrauded 50,000 investors of up to 226 billion yen.
The net had been tightening steadily around Mr Nami ever since L&G went bankrupt. The company became well known as a seller of bed linen and health products and for issuing its own virtual currency – Enten, or Divine Yen – which were stored on mobile phones and which customers could use to buy mattresses, food, clothes and jewellery at markets and in online shops.
Those who introduced new investors to the company were rewarded with commissions. In 2005, the company set up a "research institute" called the Akari Laboratory, which was registered with the Government as a non-profit organisation dedicated to the revitalisation of local economies. Famous musicians and distinguished academics performed and lectured at events organised by Akari.
It became obvious that something was wrong in February 2007 when L&G announced that dividends would be paid in Enten instead of cash. It laid off most of its employees in September of that year and its offices, as well as Mr Nami's home, were raided by the police the following month. Japanese newspapers reported at the time that he had a history of involvement in pyramid schemes.
Mr Nami was in the early Seventies the vice-president of a car parts dealer named APO Japan, which enticed 250,000 people into a pyramid scheme involving exhaust pipes. He then set up a company called Nozakku, which sold stones that, the company claimed, could turn tap water into natural water. The company went bankrupt with debts of 4.5 billion yen in March 1978 and Mr Nami was jailed for fraud.
He established L&G and became its chairman in August 1987 with executives of Nozakku. Among the goods L&G sold was a futon mattress said to boost the immune system of those who slept on it. L&G's president, Masuo Saeki, was arrested in 1987 for a separate pyramid scheme.
