Investigative sources on Wednesday warned that L&G K.K. Chairman Kazutsugi Nami, 75, and other senior officials and employees of the Tokyo-based bedding supplier will be arrested next week on suspicion of defrauding its affiliates through a sham investment scheme.
The firm allegedly collected more than ¥200 billion by issuing its own currency, called Enten, which could be used at company-organized bazaars.
The money allegedly collected is the most ever for a Japanese investment scam, topping the ¥200 billion embezzled in the 1980s by Osaka-based Toyota Shoji, which mainly bilked senior citizens on the pretext of selling gold bars.
Nami and others are believed to have collected the money starting from around 2001, telling investors they would receive a 9 percent dividend every three months for every ¥1 million deposited with the firm, according to the investigation.
L&G, which is undergoing court-led bankruptcy, also collected funds by issuing Enten and pledging to pay investors at least ¥100,000 worth of Enten every year for deposits of at least ¥100,000 in cash.
A joint squad from the Metropolitan Police Department and the Miyagi and Fukushima prefectural police forces searched L&G's head office in October 2007 for evidence it was running a fraud scam.