fraud

Scientologists Convicted Of Fraud By A French Court

Oct. 28, 2009 - A French court has convicted the Church of Scientology of fraud, but stopped short of banning the group from operating in France.

Two branches of the group's operations and several of its leaders in France have been fined.

The case came after complaints from two women, one of whom said she was manipulated into paying more than 20,000 euros (£18,100) in the 1990s.

A Scientology spokesman told the BBC the verdict was "all bark and no bite".

France regards Scientology as a sect, not a religion.

Prosecutors had asked for the group's French operations to be dissolved and more heavily fined, but a legal loophole prevented any ban.

Instead, a Paris judge ordered the Church's Celebrity Centre and a bookshop to pay a 600,000-euro fine.

A Japanese Madoff

Nami Kazutsugi, a 75 years old Japanese businessman, who leads the L & G, is accused of having organized a system pretty similar to that of Bernard Madoff.

But just before his arrest Thursday February 5, he did not hesitate to say: "The police have ruined my business. Nobody has lost as much as me."

The "Ponzi Scheme" or "Pyramid Scheme" which he created between 2001 and 2007 allowed him to collect between 1 and 2 billions, by promising fabulous yields (nearly 36% last year) to his clients.

Funds from new investors were used to pay the interests of prior investors. More than 37,000 people might be victims of this fraud.

L & G issued its own currency, the "enten", a combination of ideograms "yen" and "paradise", that Mr Nami wanted to become a global currency.

For each deposit of $1000, the investor received 100,000 "enten" that he could spend in L & G stores, a sort of bazaar installed throughout the archipelago, the online sales sites or partner hotels.