Year made public: 2009
Estimated Losses: $1.4 billion
Founded in 2000, Japanese bedding linen company Ladies & Gentlemen (L & G) governed by Kazutsugi Nami had operated for seven years, but during that time managed to attract 128.5 billion yen by promising income of 36%.
L & G also launched its own e-currency, called Enten, which investors received in return for their invested funds. The investigation against the top management of L & G started when in 2007 the company stopped payments on deposits and refused to return the money. In fact, there was no money on its accounts: only 300 million yen (about US $ 3 million) was found during the investigation.
The investigation lasted for three years, and in the spring of 2010, the 76-year-old Kazutsugi Nami was sentenced to nearly 18 years in prison. This might bring moral satisfaction to deceived investors, but did not compensate for their financial losses.
At the time of L & G launching, Kazutsugi Nami had extensive experience in fraudulent schemes. In striving for greater profits, he was involved in different pyramid schemes since the 1970s. In the 1970s Nami was vice president of APO Japan Co., an auto equipment sales company. The scam based company, that was a Ponzi scheme, has sold of exhaust gas removal devices. The scam was disclosed and the company went bankrupt in 1975.
Nozakku Co., another Nami’s company launched on 1973, sold “magic stones” that were claimed to turn tapwater into natural water. The company’s annual sales reached more than 2 billion yen a year before it too went bankrupt in 1978. Nami was arrested in September 1978 by Mie Prefectural police on suspicion of fraud, and was sentenced to prison. Before his arrest in 1978, Nami also established PHC, a company selling pressure cookers.
Ponzi Scheme is an investment scheme that provides incomes of earlier investors on account of the funds received from later investors. At first, it may seem perfectly legitimate, but Ponzi scheme is usually destroyed as soon as the flow of funds from new investors is no longer sufficient to make payments to the old ones. The scheme is named after Charles Ponzi, who is notorious for using this affair in early 1920. Ponzi is not the author of the idea, but he was the first con artist in the United States who managed to get a huge amount of investment.