The bedding supplier, a fake currency and '£1bn scam'

(STR/AFP/Getty Images)

What investors received from a Japanese businessman, according to police, was hot air and not a lot else.

Kazutsugi Nami, the chairman of the now bankrupt bedding supplier, L&G, was arrested by police in Tokyo after allegedly defrauding thousands of investors of around £1bn. In what some have likened to a Japanese version of the scandal surrounding Bernard Madoff – the US banker charged with losing billions of dollars of investors' money – Mr Nami had offered returns of up to 36 per cent. He even issued his own electronic money which he claimed would become a valuable resource during the worldwide economic downturn.

The money was called "enten", a combination of the Japanese words for yen and paradise. Investors were allotted the same amount of cash that they provided to Mr Nami in "enten" and their balance logged into their mobile phones. They could use it to buy L&G products online.

Reports said many of the alleged victims, caught up in what is believed to be Japan's biggest such fraud, were elderly people who initially bought everything from vegetables to futons with the currency and also attended promotional fairs. Yet Mr Nami was allegedly promoting nothing other than his own interests while, it is claimed, around 37,000 investors were duped. Police will only say that Mr Nami was one of 22 individuals arrested.

For all the accusations that have been levelled at him, the 75-year-old yesterday appeared remarkably nonchalant, telling reporters that he had done nothing wrong. Drinking beer with his 5.30am breakfast at a local restaurant, prior to his arrest, he said: "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." Before being led away by the police, he added: "I have put my life at stake."

Japan's NTV network yesterday showed footage of a so-called enten fair where enthusiastic investors sang the praises of Mr Nami and his extraordinary get-rich scheme. One woman was heard saying: "Enten life is wonderful." Another woman said: "It'

s like a dream. I can buy anything."

Mr Nami's alleged antics and the schemes he devised may seem preposterous, even comical, but thousands of people have suffered. Lawyers acting for 900 of the victims say that one elderly woman had been defrauded of more than 100 million yen (£760,000). Local media quoted one 65-year-old woman who had lost 30m yen (£228,000) that she had saved over four decades. She said: "I thought the company was fine as it was in business for a long time." Another woman, aged 70, and who had lost two million yen, said: "I had fun and a lively life … I was stupid. It's my fault as I was greedy."

Reports yesterday suggested that investigators have been closing in on Mr Nami for some time. The company was founded in 1987 but signs of problems emerged at the beginning of 2007 when L&G stopped paying cash dividends and offered payments only in "enten". By September 2007, most of the company's staff had been fired and two months later it went bankrupt.

Before he was marched away by officers, Mr Nami boasted that his currency could yet become a success. "Because of the financial crisis, countries will adopt the enten in three years' time," he insisted. "I will start shining and become world famous. I will certainly move the world."