Japan Braces for Livedoor Verdict

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Japan is holding its breath as Takafumi Horie, former CEO of Internet conglomerate Livedoor, awaits his fate from a Japanese court system known for returning guilty verdicts. Horie was arrested in January 2006 for alleged securities fraud.

Unlike the rest of Japan’s be-suited business class, Horie was known in Japan for his t-shirt-and-jeans business style. As a University of Tokyo dropout, he made his fortune as founder of the Livedoor web portal and ISP. His flamboyant business style and personal life stood in stark contrast to the formal, ritualized world of Japanese business. He ran for Japanese parliament and tried to buy out several Japanese business institutions including a pro baseball team and one of Japan’s largest TV networks.

But according to prosecutors, who want to put him away for four years, Horie orchestrated a complicated conspiracy involving shell companies and stock splits to inflate Livedoor’s stock price. In January 2006, police raided Livedoor offices, seizing documents and serving a warrant for Horie’s arrest.

In September, a witness for the prosecution said Hideaki Noguchi, Livedoor’s head of finance, ordered him to sell Livedoor shares to companies he suspected were connected to Livedoor. As the arrests of Livedoor executives continued through January, Noguchi was found dead of an apparent suicide.

Prosecutors began investigating Livedoor in 2004 after a marketing subsidiary falsely reported relating to an acquisition. According to the Times of London, rumors on the street suggest Livedoor had connections with the Japanese Yakuza mafia, possibly serving as a money laundering operation going as far back as the late 1990’s. Last month, Japanese authorities received bank documents related to the case from Switzerland. The contents of the documents have not been made public, but the Associated Press says that Japanese authorities believe Horie and his business partners used Swiss bank accounts to transfer tainted money abroad.

Horie claims he was framed by an overzealous prosecution. Former Livedoor CFO Ryoji Miyauchi pleaded guilty in a separate trial. According to the defense, the scheme was engineered by Miyauchi, and police stopped investigating Miyauchi after he fingered Horie. Horie has refused to sign a confession in exchange for a lighter sentence.

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