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Japan's Ex-Livedoor CEO Found Guilty of Accounting Fraud

The former chief executive of Livedoor, once Japan's pioneering Internet services company, has been convicted of orchestrating an elaborate accounting fraud. As Yuriko Nagano reports from Tokyo, Takafumi Horie was sentenced to prison.

Takafumi Horie, the former high-flying chief executive of the Internet services company Livedoor, was found guilty of misleading investors and violating securities laws. He was sentenced to two and a half years in prison and granted bail pending appeal.

The case highlights the government's desire to crack down on stock market offences. Prosecutors argued that Horie had falsified earnings data to inflate stock prices as part of an effort to hide millions of dollars in losses.

Horie's lawyer Yasuyuki Takai says the trial was unfair and would damage Japan's growing entrepreneurial spirit.

Takai says the case is based on very ambiguous evidence and it is an unjust verdict.

Takai says the judge's decision against his client hinged on testimony from his former chief financial officer, Ryoji Miyauchi, among others. Miyauchi's verdict is to be handed down next Thursday - he pleaded guilty and testified against his former boss.

Horie was arrested in January 2006. At the same time, prosecutors raided Livedoor's offices to search for evidence, sparking a sell-off in the Tokyo stock market. The arrest triggered a drastic fall in Livedoor stock values, and the company was de-listed.

Known as a maverick and successful entrepreneur, Horie left university before graduating to found a new kind of company offering Internet services. Horie's company grew through aggressive mergers and acquisitions.

Horie is also known by the alias of Horiemon, based on a Japanese animated character Doraemon. He tried to acquire a flailing baseball team, ran for public office with the backing of former Prime Minister Junichiro Koizumi and penned several how-to-make-a-million books, some of which were bestsellers.

The judge said he did not wish to condemn everything Horie stood for. The judge told Horie to make up for his crime by serving time and hoped Horie would make a fresh start.