Since May 2005, the renowned racehorse owner has lived under near-house arrest after he and his business partner, Alberto Vilar, were arrested for fraud. Although the allegations against Tanaka changed without explanation from point of arrest to point of charge, the 63-year-old Kingston-on-Thames resident was forced to surrender his passport, put up $11 million in bail and submit to electronic tagging. Bail was later reduced to $10 million (about £5.3 million).

Now, his investment management firm worth $1.25 billion in client assets has collapsed and its sister company in the UK wound up. He has not seen his British-based wife and children for 16 months. His defence costs will total more than $3 million once his case finally reaches court, yet they are non-recoverable under US law, even if the charges are deemed unfounded.

All this and still no prospect of imminent justice. Despite a 70-day “speedy trial” statute in the US, pleas for an early hearing have met with repeated postponements by the prosecution. A judge recently relaxed Tanaka’s confinement, allowing him to leave the house for reasons other than his mouth-cancer treatment, but lawyers fear that even the new trial date, January 8, 2007, is likely to encounter further delay.

His story recalls the recent, case of the “NatWest Three”, the British bankers sucked into the Enron scandal. But Tanaka is anxious to point out that David Bermingham, Giles Darby and Gary Mulgrew seem set for trial within 14 months of their extradition, received far less punitive bail fees, are free from house arrest and guaranteed access to their families.

“Nobody would wish to be prosecuted in the US system,” Tanaka, speaking by phone from within the four walls that contain him for all but 30 hours a week, said. “My reputation is gone, my company is dead, my employees are out of work, I’m knocked out of a profession I’ve been in since 1970, I’m stuck in the US incognito, spending millions on a defence and forced to drop out of life. I’m guilty till proven innocent.

“As my wife, Renata, worked for my company, she can’t come here for fear she’d be arrested stepping off the plane at JFK. It’s tough on her. She’s running our home and finances, not to mention coping with an 11-year-old with no father.”

Born to Japanese parents in a US internment camp in Idaho, Tanaka studied at Massachusetts Institute of Technology and Imperial College, London. He donated £25 million to the latter’s business school in 2000. He met Cuban-born Vilar in the late 1970s. They shared an astute enthusiasm for technology stocks and made dazzling early calls like Microsoft, Cisco, eBay, Amazon and AOL. Latterly, they managed pension funds for clients such as Johnson & Johnson until scandal prompted mass exodus.

Tanaka, who ran the Grosvenor Square offices of Amerindo Investment Advisors Inc, was arrested in his hotel when visiting the New York offices where Vilar was based. “There was a knock on the door and I remember being irritated because I’d put up the ‘Do Not Disturb’ sign. I opened it and the feds grabbed me,” he recalled. “I guessed right away why I might be in this mess. We’d had a troublesome client for about 20 years. She has idiosyncrasies.”

The alleged “troublesome” client is Lily Cates Naify, mother of the Hollywood actress, Phoebe Cates. Her first husband was Joseph Cates, who created the TV show, The $64,000 Question, and died in 1998. Her second was the racehorse owner-breeder, Marshall Naify, who married her in 1999 and died in 2000, leaving her $10 million. The US Securities and Exchange Commission maintains that Vilar and Tanaka misappropriated $5 million that Cates had invested with Amerindo.

Initially, the commission alleged that Tanaka had used Cates’s money to purchase horses. At his indictment, this charge was dropped and replaced by conspiring with Vilar to defraud her. Specifically, Tanaka is alleged to have signed letters of authorisation and initiated transfer of Cates’s funds to other accounts controlled by Vilar, an arts patron, who used them for personal expenses and philanthropic projects.

Tanaka says he is the victim of one investigator’s zeal to unearth a scandal akin to Enron, WorldCom and Martha Stewart. He argues that the punitive terms of his detention were based on innuendo-heavy initial allegations, that less than three months earlier the commission had issued his company’s third clean inspection in 12 years and that documents were seized by unlawful or improper means.

While he waits, Tanaka spends his caged hours “digging deep” as a personal investor on the Stock Exchange and immersing himself in racing. Under his manager, Lincoln Collins, his racehorse portfolio is unaffected. This year, Gentlewave won the Derby Italiano but suffered a career-ending injury when second to Dylan Thomas in the Irish Derby. Other big-race successes include Rising Cross, in the Park Hill Stakes, and Star Parade, a grade one winner in the States.

He races proven horses. If they are good enough to compete at a high level in Europe, they remain with their existing trainers; if not, they move to the US. The best to race in his emerald-green silks, with yellow-checked sleeves, white sash and cap, are the six-times group one winner, Rakti, and the top US sprinter, Pico Central. He is not interested in breeding, so on retirement they are sold.

“Renata says, ‘Are you sure you should still be racing horses?’ ” Tanaka admitted. “Sure, if I stopped, there would be zero expenses but there would also be zero prize- money. My racing interest has always paid for itself.”

Yet Tanaka can now watch his equine investments only on screen. Although Belmont and Aqueduct racetracks fall within his permitted range, he cannot attend when his horses run because the electronic-tag monitors appear not to work at weekends. “I’d rather not think about what is happening to me,” he said. “I read a lot. I focus on my day in court.”