Three former managers of a Japanese wagyu farm were arrested Tuesday on suspicion that they lead a beefy, $4.34 billion ponzi scheme that defrauded 73,000 investors, the Wall Street Journal reports.
Wagyu — the "caviar of beef" — retails for hundreds of dollars a pound. Farmers add beer or sake to the coddled cows' food and massage them to prevent muscle cramps.
The managers of the Agura farm offered investors a "wagyu beef ownership system" with promised annual returns of 8%. They claimed the investors would profit from the calves born to purchased cows.
In reality, there weren’t as many cows as the number sold. According to the former managers, the farm had to file for bankruptcy after being hit by the double whammy of falling beef prices and lower sales following the 2011 Fukushima nuclear accident. (The farm is located less than 100 kilometers from the Fukushima plant.) That left 73,000 investors with losses totaling around ¥420 billion ($4.34 billion), according to lawyers for the plaintiffs.
Agura had reported to investors that they kept 90,000 to 100,000 breeding cows. Investigators found the number wasn't quite as meaty — at 60,000.
The case may be one of the biggest consumer fraud episodes in recent Japanese history.
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