Livedoor chief Horie gets 2 1/2 years' jail

Unexpectedly harsh sentence for Japan's dot.com mogul over stock price manipulation



TOKYO - A SOLEMN Takafumi Horie sat quietly as the judge read out his sentence yesterday - two-and-a-half years behind bars for violating the securities law.

It was a new low for Japan's most famous dot-com mogul, a brash 34-year-old entrepreneur who transformed his Internet services firm Livedoor from an unknown startup to a household name - and emerged as a nationwide celebrity.

His glory days of dating actresses, tooling around town in his silver-blue Ferrari and running for Parliament came crashing down in January last year when he was arrested on suspicion of illegally manipulating Livedoor's stock price.

Yesterday, more than a year later, Judge Toshiyuki Kosaka ruled that the 'prosecutor's case was proven' and handed Horie what was seen as an unexpectedly harsh sentence.

Executives charged with white-collar wrongdoing generally get a suspended sentence and avoid prison in Japan.

Experts said the ruling symbolised a new determination by regulators to clamp down on corporate misdeeds.

During the trial, which began last September and has drawn intense Japanese media coverage, Horie said he had been framed and accused prosecutors of having targeted him for standing out too much with his brash, unconventional business style.

Prosecutors charged that Horie pressured aides to inflate profits using gains from the sale of Livedoor stock held in Hong Kong-based investment funds and phoney sales to allied firms.

The funds were 'set up for the purpose of evading the law', presiding judge Kosaka said. 'At that point, the prosecution's case was proven.'

The defence team appealed against the ruling shortly after the verdict.

At the end of his nearly two-hour statement, the judge had kind words for Horie.

'Although you may have been found guilty, it doesn't mean that everything about you has been condemned,' he said.

He told Horie he had received a letter from 'a parent with a handicapped child' who was inspired by Horie's dreams and had bought Livedoor stock and still has them.

'I want you to make up for what you've done and start your life anew,' the judge said.

Horie, also known as the 'T-shirt clad CEO', was dressed in a dark suit and tie yesterday. He sat passively through most of the session, at times shuffling through papers on his desk.

In court, his defence team attempted to portray him as a meek chief executive who relied so heavily on advisers that they came to dominate his company.

'I never studied accounting,' the dropout from the prestigious University of Tokyo testified in November. 'A management book I read said to leave that to specialists, so that's what I did.'

But his new-found humility clashed with the arrogant public persona of the man who published a dozen advice books such as How To Make 10 Billion Yen and The Easy Way To Build A Money-Making Company. He once boasted he could take over Sony.

Four other Livedoor executives, including former chief financial officer Ryoji Miyauchi, have pleaded guilty in the case.

Horie founded Livedoor in 1997. Within years, he became one of Japan's richest men and was soon a tabloid regular with a penchant for actresses and Ferraris.

He nearly won a seat in Parliament in 2005 after being encouraged to run by then prime minister Junichiro Koizumi.

Livedoor, which operated an Internet portal and offered web-related services, drew a large number of individual investors, partly because of Horie's fame.

Those investors, many of them amateurs at the stock market, took big losses when Livedoor shares nosedived after Horie's arrest and the firm was delisted.

News of the prosecutors' raid on Livedoor's offices last year sparked a frenzied sell-off of Japanese technology stocks, forcing the Tokyo Stock Exchange to shut down earlier because it was overloaded with unprecedented trading volume.

About 3,600 individual investors have sued Horie and Livedoor for damages, saying they were duped into buying falsely valued shares.

Horie was released on 500 million yen (S$6.5 million) bail after the verdict.

He was not available for comment but has indicated that he is already planning a comeback.

Last December he said he was now looking to build a new business for consumer space travel and is working with several people to develop a rocket in Tokyo.