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Page last updated at 09:45 GMT, Thursday, 5 February 2009

Chairman arrested in Japan 'scam'

Kazutsugi Nami speaks to the press before being arrested by police in Tokyo on February 5, 2009.
Kazutsugi Nami had offered investors 36% annual returns

Japanese police have arrested the chairman of a Tokyo bedding supplier over an alleged investment scam reportedly worth $1.4bn (970m).

Kazutsugi Nami, chairman of the now bankrupt L&G, had offered investors 36% annual returns and issued special electronic money termed "Enten".

The 75-year-old businessman had built a cult status among those who invested in his company.

He is reported to have swindled 37,000 investors, but denies any wrongdoing.

Police have confirmed his arrest but not the size of the alleged fraud.

Mr Nami and other L&G executives allegedly collected huge investment funds from clients despite knowing they could not pay the promised investment returns.

He also collected funds by issuing ''Enten'', saying that the quasi-currency could be used at company-sponsored bazaars nationwide and internet markets, according to an investigation reported by Kyodo news agency.

'Enten' fair

Mr Nami has denied any wrongdoing, AFP news agency reports.

"I'm leading 50,000 people. Can they charge a company this big with fraud?" he asked reporters.

Questioned over whether he was sorry for his investors, he was quoted as replying: "No! I have put my life at stake." He was then led away by the police.

Kazutsugi Nami had built up a cult-like following among customers.

Mr Nami wooed his so-called "shareholders", saying he had a "divine decree" to "eliminate poverty from this world", according to lawyers representing victims.

"Enten" was fed into investors' mobile telephones and used to buy items ranging from vegetables to futons, clothes and jewellery.

The name "Enten" is apparently a combination of the Japanese words for the yen currency and paradise.

The NTV network aired footage of an "Enten fair" where participants sang the praises of the investment plan.

L&G was established in 1987, at first selling bedding and health products.

It began its investment scheme, including the issuance of "Enten", in 2001.

The company stopped paying cash dividends in February 2007, and by September of that year had sacked most of its employees, Kyodo reported.

It folded in November 2007 and is now undergoing a court-led bankruptcy process.

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