Japan’s Bernie Madoff

The chairman of a Japanese bedding company has been arrested for running a massive investment scam that may have netted over $1 billion. Kazutsugi Nami is believed to have defrauded over 37,000 people, who he promised over 36 percent interest on their investment.

This being Japan, the case has a high-tech twist. In addition to crappy linens, Nami’s company was well-known for establishing a virtual currency called Enten, or “divine yen,” that customers could store on their mobile phones and use to buy their products. Enten proved to be Nami’s undoing:

From about 2004, people who deposited 100,000 yen or more received the same amount in “Enten” through their mobile phones, and a system was introduced to enable the currency to be used to buy products on an Internet site, speeding up the company’s collection of investments.

However, in February 2007, L&G informed all members that it was converting investment dividends from cash to Enten. The one-sided announcement resulted in a flood of requests from investors to cancel contracts, and sparked lawsuits demanding the return of principal investments. In October that year, police searched the Tokyo-based company’s head office on suspicion of violating the law concerning regulation of investments.

Whether you’re on Wall Steet or Tokyo, it’s generally best to be wary of anyone promising “yen from heaven.”

Photo: STR/AFP/Getty Images