Japanese police on Thursday arrested a business executive who built a cult-like status among thousands of investors whom he reportedly defrauded of at least 1.4 billion US dollars.

Kazutsugi Nami, chairman of now bankrupt bedding supplier L&G K.K., had promised 36 percent annual returns. His company even issued its own electronic money, which he predicted would be a hit during the global economic crisis.

Many of the victims were elderly people, who initially bought everything from vegetables to futons with the currency and would attend promotional fairs set up by the 75-year-old Nami.

The arrest comes two months after US broker Bernard Madoff was arrested and charged with using billions of US dollars from new investors to pay off older ones in a pyramid scheme.

Soon before his arrest, Nami told a swarm of reporters and camera crew that he had done nothing wrong.