Japan's Horie found guilty

Takafumi Horie, the 34-year-old Internet entrepreneur who rattled corporate Japan with his celebrity lifestyle and brash takeover bids, was found guilty and sentenced to two years and six months in jail on Friday for his role in a securities fraud at his former company Livedoor.

The sentence handed down by the Tokyo District Court contrasted with punishments typically meted out to Japanese executives convicted of white-collar crimes, who often receive suspended sentences after pleading guilty and showing remorse.

A dropout from the prestigious University of Tokyo who used savvy marketing and an aggressive string of acquisitions to expand Livedoor's market value to a peak of $6 billion, Horie had called the charges "malicious" and blamed his chief financial officer for the accounting mess.

Prosecutors had sought a four-year jail term.

Horie, wearing a dark suit and a gray tie, stood while the verdict was given and then sat with a stoney expression while flipping through documents.

He is expected to appeal the sentence.

The trial drew intense media attention in Japan, where opinions of the T-shirt-wearing, Ferrari-driving Horie were divided even before his arrest.

Horie's attempt to buy a baseball team in 2004 and his takeover battle with a larger media group a year later won him admirers among youth but annoyed conservative business leaders.

Prime Minister Junichiro Koizumi, another maverick, tapped Horie to run in a 2005 national election as a poster boy for economic reform, though Horie failed to win a seat.

The author of a dozen advice books such as "How to Make 10 Billion Yen" and "The Easy Way to Build a Money-Making Company" claimed he relied so heavily on advisers that they came to dominate his company.

"I never studied accounting," Horie testified in November.

"A management book I read said to leave that to specialists, so that's what I did."

Four other Livedoor executives including the CFO, Ryoji Miyauchi, have pleaded guilty in the case.

Horie must also contend with lawsuits from shareholders over the $5 billion in market value shed by Livedoor following his arrest, which sparked a share sell-off that swamped the Tokyo Stock Exchange's computer system, keeping it on shortened trading hours for three months.

Livedoor lost its Tokyo Stock Exchange listing last April after its share price sank to just 94 yen (80 cents).

The trial centered on problems with Livedoor's 2004 earnings.

Prosecutors charged that Horie had pressured aides to raise the company's interim recurring profit forecast using gains from the sale of Livedoor stock held in a Hong Kong-based investment fund, a violation of accounting rules.

After the stock sale failed to raise earnings as planned, Horie then signed off on a plan to book phony sales to allied firms to make up the difference, the prosecution said.

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

Horie had said he had only pushed managers to improve Livedoor's underlying business, not to fudge the books.

In another high-profile corporate scandal that gripped Japan, Yoshiaki Tsutsumi, once dubbed the richest man in the world, was sentenced in 2005 to 30 months in jail, suspended for four years, for insider trading and falsifying financial statements at his Seibu Railway group.

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- Mumbaikar