The police have arrested the chairman of L&G K.K., a Tokyo-based bedding supplier, and 21 other people on suspicion of defrauding investors through a sham investment scheme. The specific charge that led to the arrests alleges that the suspects collected about ¥118 million from six people between July 2006 and December of the same year by deceiving them into thinking they would receive a 9 percent dividend every three months for every ¥1 million invested.
Investigators suspect that L&G collected about ¥126 billion from 37,000 people from 2000 to 2007. L&G went bankrupt last November, and the police say that although the company now owes investors about ¥42.3 billion, its assets total only about ¥1.4 billion.
L&G was established in 1987. It started collecting "cooperation money" from investors in 2001, promising that for every ¥1 million invested they would receive a 9 percent dividend every three months. The company also issued its own quasi-money called "enten." If an investor paid in ¥100,000 or more, he or she received enten of the same value every year. Enten could be used only in bazaars sponsored by the firm and Internet markets. The investor would get back the cash when he or she canceled the investment. One wonders if the investors were naive enough to accept these offers.