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Japanese Internet mogul found guilty in appeal

July 25 12:05:01 PM, Yahoo News

AP - A Japanese appeals court upheld the conviction of flamboyant former Internet mogul Takafumi Horie on Friday in an ongoing case that has come to symbolize this nation's effort to deal with white collar crime at emerging dot-coms.

The Tokyo High Court rejected Horie's appeal of a lower court conviction of securities laws violations. He was found guilty in March last year of masterminding a network of decoy investment funds to manipulate earnings at his Net services startup Livedoor Co.

Horie, 35, who has repeatedly said he is innocent, will take his case to the Japanese Supreme Court, his lawyer Yasuyuki Takai said after the ruling.

"We definitely cannot accept this decision," he said on nationally televised NHK news. "It is incomprehensible."

Also upheld Friday was the Tokyo District Court decision that sentenced Horie to 2-1/2 years in prison. In Japan, it is still quite rare for an executive to get a prison sentence for white collar crimes. Horie is out on bail.

At the time of the lower court ruling, the judge had said Horie and Livedoor had caused great damage to investors. The Tokyo company's false earnings reports had grave social consequences in wreaking havoc on Tokyo markets, the judge said.

The appeals court said it agreed with that ruling, arguing that Horie as chief executive played a key role in the dubious funds set up for stock swaps and other schemes to pad Livedoor books, according to Japanese media reports.

The raid on Livedoor's offices and Horie's subsequent arrest in early 2006 sparked a frenzied market sell-off dubbed "Livedoor shock" that forced the Tokyo Stock Exchange to curtail trading over capacity problems.

Adding to the confusion, Livedoor had attracted a fair number of Japanese individual investors, including people buying stock for the first time, because of Horie's charismatic appeal.

At the height of his glamour, Horie, a dropout of prestigious Tokyo University, was a TV star, both adored and despised in this conformist culture. He was often shown at ritzy parties with celebrities and even ran for political office.

His takeover attempt of a radio broadcaster to gain managerial influence over media group Fuji Television Network Inc. also drew widespread media attention.

Prosecutors had demanded a four-year prison term for Horie in the lower court trial.

Horie's lawyers, as well as some analysts, say he is being singled-out, partly because of his defiance of a corporate culture long dominated by big-name companies.

Even Horie's assertion of innocence was unusual in a nation where 99 percent of criminal trials end in guilty verdicts and a show of remorse can help win lenience.

Horie has blamed what he called the old-style bureaucratic power elite in Japan as unfairly targeting him for merely trying to create change.

Prior to his arrest, he had publicly boasted that he was taking advantage of gray areas and loopholes in what he called Japan's primitive stock trading regulations to make millions.

"I stood out too much," Horie said in a 2006 interview with The Associated Press. "Tackling something new means doing what's not considered yet by the legal system."

Livedoor still exists under new management but is a mere shadow of the headline-grabbing startup that it once was.

Several other Livedoor executives and accountants have also been found guilty. Livedoor has also been slapped with the largest fine ever in corporate Japanese history — 280 million yen ($2.6 million) — for violating securities laws.

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