JAPAN: Japanese Internet entrepreneur Takafumi Horie sentenced to two years and six months for securities fraud

Record ID: 465113

  • Title: JAPAN: Japanese Internet entrepreneur Takafumi Horie sentenced to two years and six months for securities fraud
  • Date: 17th March 2007
  • Summary: (BN02) HIROSHIMA, JAPAN (FILE) (REUTERS ) VARIOUS OF HORIE RUNNING FOR A SEAT IN PARLIAMENT IN THE 2005 GENERAL ELECTIONS (3 SHOTS)
  • Embargoed: 1st April 2007 13:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Crime / Law Enforcement,Science / Technology
  • Reuters ID: LVAEZECCXHCAVWYJK1VID81LMPNL
  • Story Text: Takafumi Horie, the 34-year-old Internet entrepreneur who rattled corporate Japan with his celebrity lifestyle and brash takeover bids, has been sentenced to two years and six months for his role in a securities fraud involving his former company Livedoor.
    Takafumi Horie, the 34-year-old Internet entrepreneur who rattled corporate Japan with his celebrity lifestyle and brash takeover bids, arrived in court on Friday (March 16) to hear his final verdict in the seven month long case.
    TV broadcasters, their helicopters hovering above the court, showed Horie looking relaxed and wearing a dark suit, white shirt and no tie as he entered the building.
    The verdict was read out thirty minutes later and he was found guilty and sentenced to two years and six months in jail for his role in a securities fraud at his former company Livedoor.
    The sentence handed down by the Tokyo District Court was a harsh contrast with punishments typically meted out to Japanese executives convicted of white-collar crimes, who often receive suspended sentences after pleading guilty and showing remorse.
    But a defiant Horie had insisted on his innocence to the end, a stance that may have marked him for tougher treatment. He is expected to appeal.
    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.
    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 young people but annoyed conservative business leaders.
    Among his fans was former Prime Minister Junichiro Koizumi, another maverick who tapped Horie to run in a 2005 national election as a poster boy for economic reform, though he failed to win a seat.
    Analysts said this case represented the change that Japan's business world was undergoing.
    "The difficulty here is that Japan is in a transition from a principles-based, old-boy network that determines rules and regulations within Japan on a case-by-case basis to something that's more rules-driven. Written in black and white and Horie, I believe, got caught up in that transition. Without any kind of political backing within politics or within business, he was left alone. So i think one lesson we can take from this is in Japan as well as almost any other country but particularly in Japan you still need friends, you still to work within the network in order to maintain long-term business success," said Keith Henry, director of Asia Strategy.
    Opinion outside the courthouse in Tokyo was varied and seemed to depend on the age group.
    "Generally, the verdict would be five or six years or at least four years. So I think this verdict is pretty light," 59-year-old lawyer Onose, who is unrelated to the case, said.
    "I felt much closer to him and liked him because with this casual attire he seemed better than the usual businessmen with their business suits looking all serious," said Michiko Kosaka, a 25-year-old student who added that she thought the verdict was too strict.
    At the court house, a group of performers even tried to steal the spotlight from Horie with a mocking performance with masks of Horie and naked body suits.
    Horie traded his trademark casual wear for a suit during the trial and dropped some of the swagger that drove his rise to fame.
    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.
    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.
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