The plaintiff, Tokyo-based Kinmirai Tsuushin Inc, solicited funds from investors to set up IP telephone facilities. In his lawsuit, the man claims the company did not provide sufficient explanations when soliciting investors, and that the firm failed to inform investors that the business could be unprofitable.

The man attended a meeting on the firm's business in December 2004, according to his lawsuit. At the meeting, he heard about the company's "relay station owner" system, under which investors who covered the cost of setting up new relay stations would continue to receive payments from subscribers for the use of lines going through those stations.

The company told the attendees that relay station owners could recover their investment within three years.

In January 2005 he formed a contract with the firm, and by July this year he had paid 23.65 million yen in setup costs, and 9.57 million yen towards the rental of IP telephone consoles in China.

Between August 2005 and September 2006, he received 8.2 million yen in dividends, but since October the payments have stopped.

"The condition of the relay station is unclear, and if the company can't secure a certain number of users of the station's lines, there'll be no foreseeable way of getting the initial investment back -- but the company neglected to explain that," the man said in his claim.

Lawyers for the firms said they couldn't comment on the case.

"We need to examine the claims in detail, and we cannot comment at this stage," a legal representative for Kinmirai Tsuushin said.