Picture opening your quarterly dividend envelope in February 2007, expecting yen, one of the world’s most stable currencies, but instead finding paper vouchers denominated in “Enten,” which literally means “divine money” in Japanese. These heavenly tokens were only good in one man’s bizarre marketplace where you could buy bedding, socks, and produce, but definitely couldn’t pay your rent.
This actually happened to 37,000 Japanese investors who discovered their life savings had been converted into monopoly money.
In the latest Oh My Fraud episode, “Divine Yen, Devilish Fraud,” host Caleb Newquist unpacks one of Japan’s most absurd financial frauds. The story of Kazutsugi Nami and his Ladies & Gentleman company—yes, that was the actual name—offers critical lessons for accounting professionals in a time of growing cryptocurrency schemes.
A Career Built on Fraud
You might think a fraud conviction would end someone’s career in finance. Kazutsugi proved otherwise, repeatedly.
His criminal timeline reads like a fraudster’s greatest hits. In the 1970s, as vice president of APO Japan, he helped market fake exhaust gas removers through a pyramid scheme. The devices didn’t work, but 250,000 people bought in before the company went bankrupt and authorities came knocking.
Most people would have learned their lesson. Not Kazutsugi.
By 1973, he’d already founded Nozakku Co., selling “magic stones” that supposedly purified tap water. The timing was perfect, as Japan faced severe water contamination from rapid industrialization, and desperate people wanted solutions. At its peak, Nozakku pulled in roughly ¥2 billion annually (about $6-8 million in late 1970s dollars). The stones weren’t magic. They didn’t purify anything. By 1978, Kazutsugi was in prison for fraud.
In a move that should make every accounting professional pause, in 1987, while his fraud record was still fresh, Kazutsugi founded Ladies & Gentleman (L&G). Eventually, 37,000 investors would hand over billions of yen to a convicted fraudster. One victim later justified their investment because L&G had been “in business for a long time.”
The bizarre culmination came on February 4, 2009, when police arrived to arrest him. Instead of hiding, Kazutsugi held court at a restaurant, charging reporters ¥10,000 each to attend his breakfast press conference while he sipped beer at 5:30 AM. He’d even packed spare underwear, expecting the arrest.
When asked about defrauding investors, his response was pure theater. “Do you think I could behave openly like this if there had been a fraud?” Later, he added, “Time will tell if I’m a con man or a swindler.”
The Divine Currency Revolution That Wasn’t
Kazutsugi didn’t just promise returns; he promised revolution. He called Enten the future of money, a currency that would break free from Japan’s economic system. He claimed governments would eventually adopt it and that he had a divine decree to eliminate poverty worldwide.
At investor events that resembled religious revivals, Kazutsugi styled himself as a modern-day Oda Nobunaga, one of Japan’s great historical figures, who unified Japan through military conquest in the 16th century.
The 36% annual returns Kazutsugi promised should have been an immediate red flag. In 2007, when Japanese government bonds yielded around 1.5%, 36% guaranteed returns defied financial gravity. Yet thousands of investors, many elderly and seeking retirement security, handed over their savings.
The scheme’s genius was its gradual escalation. Initially, L&G paid dividends in real yen, establishing trust. Then in early 2007, dividends became partially Enten. Finally, they were paid entirely in this imaginary currency that could only be spent in L&G’s internal marketplace, essentially a curated flea market offering comforters, vitamins, and produce.
As Caleb observes in the episode, these are exactly the products “multi-level marketing companies love because you can just claim it’s enhanced by whatever mystical bullshit you are selling that year.”
When Vision Meets Delusion
During the episode, Caleb and producer Zach Frank explore fascinating parallels between cult leaders and modern tech CEOs. Both sell transcendent visions that attract devoted followers.
“They see themselves as right. They’re cocky, they know the way, and they’re the only ones who know the way,” Zach observes.
This absolute certainty becomes magnetic. Caleb notes how Elon Musk, before his political involvement exposed his character. “He had this vision for the world. We’re going to Mars and we’re going to save the world. And people are like, yeah, I’ll follow you anywhere.”
Zach offers crucial insight about why these figures gain traction. “We’re in a time where gurus are becoming more popular than ever. It has to do with the lack of trust in institutions and science in general. People want to find someone to give them the answers to everything.”
When traditional systems seem to be failing, like during the 2007-2008 financial crisis when L&G was collapsing, the person who claims to have all the answers becomes irresistibly attractive.
The Spectacular Collapse
When L&G announced dividends would only be paid in Enten—no more real yen—investors understandably panicked. Some wanted to know whether they could exchange Enten for things like rent and food. They could not.
Like a classic bank run, investors crowded outside L&G locations demanding money and answers. The Japanese press pounced on the story. In November 2007, L&G filed for bankruptcy with estimated losses between ¥126 billion to ¥226 billion (roughly $1-2 billion USD). It was rumored to be Japan’s largest consumer investment fraud ever.
Even as police led him away, Kazutsugi insisted, “I am the poorest victim. Nobody lost more than I did.”
In March 2010, Kazutsugi was sentenced to 18 years in prison, a harsh sentence by Japanese standards. Even then, he insisted Enten was the future.
Lessons for the Profession
For accounting professionals, these patterns translate into specific warning signs:
- Gradual shifts in payment methods that move from standard to non-standard practices
- Closed ecosystems where value can only be realized within the company’s control
- Recruitment-based growth models dressed up as community building
- Attacks on regulators rather than substantive responses to concerns
- Appeals to revolution that discourage traditional due diligence
- Impossible guaranteed returns justified by proprietary methods
Distinguishing between legitimate innovation and sophisticated fraud requires more than technical knowledge; it requires understanding the psychology of persuasion.
Real innovations might disrupt industries, but they don’t violate mathematical laws. A 36% guaranteed return isn’t innovation; it’s impossibility. A currency that only works in one company’s marketplace is company scrip, a practice outlawed in most developed nations for good reason.
As Caleb warns, “If someone promises you a 36% annual return, but that return comes back to you in tokens that are only good for bedsheets, fruits, and the occasional pressure cooker, you are not diversifying your portfolio. You are subsidizing a cult with slightly better stationery.”
Listen to the full Oh My Fraud episode to hear the complete breakdown of this bizarre case, including more details about the victims and the reasons smart people fall for obvious frauds. The episode offers insights that connect historical frauds to modern schemes and the psychological vulnerabilities that transcend cultures and currencies.
Whether it’s cryptocurrency, NFTs, or the next financial revolution, the pattern persists: charismatic leaders promising transformation, impossible returns dressed as innovation, and schemes that create confusion where clarity is desperately needed. Our role as accounting professionals is to ensure that when someone claims to be building the future, they’re working with real materials, not divine intervention.