Takafumi Horie, one of Japan’s highest-profile internet entrepreneurs, was on Friday found guilty of securities fraud and sentenced to 2½ years in prison – a harsh sentence in a country where white-collar crimes rarely elicit jail terms.
The spiky-haired 34-year-old university dropout – widely known as “Horiemon” – and his Livedoor became symbols of a clash between traditional, consensus-driven Japan Inc and a new breed of brash, outspoken entrepreneurs who openly criticised cultural institutions, such as lifetime employment, and flaunted their wealth. Mr Horie’s arrest last year came after he launched a bid to take control of the country’s biggest broadcaster.
Mr Horie was arrested last year and accused of conspiring with other Livedoor executives to boost profits falsely at his sprawling internet empire. Handing out the verdict on Friday, Toshiyuki Kosaka, presiding judge, said Mr Horie “bears grave responsibility for deceiving investors”.
Mr Horie is appealing against the conviction, and will remain free on bail during the process.
Most white-collar criminals in Japan receive suspended prison terms after expressing remorse. Observers said the fact that Mr Horie adamantly maintained his innocence, pinned the blame on his colleagues and flaunted his disdain for the “jealous elite of old Japan” rankled prosecutors and judges. “I think there’s a cultural element to this decision which may be hard for westerners to understand,” said Christopher Wells, a partner at White & Case in Tokyo. “The judges appear to have punished Horie more harshly because of his attitude towards the judicial system.”
Mr Horie represented the antithesis of the typical Japanese suited salaryman who slogs away at the same company for a lifetime. He dropped out of Tokyo University to form Livin’ On The Edge, a web consulting company. It later morphed into Livedoor, which at its peak had a market capitalisation of $7.1bn.
Mr Horie revelled in the material trappings of success, flaunting Ferrari cars, a taste for expensive restaurants, and his home in Roppongi Hills, one of Tokyo’s most fashionable districts.
Spurred on by Junichiro Koizumi, Japan’s former prime minister, Mr Horie also dabbled in politics by running – unsuccessfully – as an independent candidate for parliament in 2005.
Lawyers said the harsh penalty imposed on Mr Horie reflected a newfound zeal among regulators to crack down on corporate crimes.
Yoshiaki Tsutsumi, the patriarch of the Seibu railway and property group who was once the world’s wealthiest man, was sentenced to 30 months in prison, suspended for four years, for insider trading and falsifying financial statements in 2005. Yoshiaki Murakami, the country’s most renowned shareholder activist, was arrested for alleged insider trading last year.