Once again Japan’s Livedoor’s fraud came into limelight.

Earlier as a result of the revelation of this financial fraud, more than $5bn was wiped off its value after prosecutors raided Livedoor’s headquarters in central Tokyo in January. It was subsequently delisted from the Tokyo stock exchange in April where its shares was only worth only ¥94 . This caused many innocent investors to lose their hard earned money.
In the Tokyo District Court, Mr. Takafumi Horie,33, the founder of Livedoor Co has pleaded not guilty to charges of securities/financial fraud despite the fact that his four other senior executives colleagues have pleaded guilty in May.

Horie’s court appearance was the first time he has been seen in public since April 27, when he was freed on 300 million yen bail after three months in detention
Interesting facts about Takafumi Horie:-

• A dropout from the elite University of Tokyo, he had created Livedoor’s predecessor, Livin’ On the Edge, some 10 years ago with just $50,000 in capital and converted it into an internet behemoth. According to Bloomberg, the 33-year-old Tokyo University dropout increased annual sales at Livedoor by 13-fold in five years as he bought more than 20 companies. At the time of his arrest, his internet empire was worth $6bn;
• In his heydays, Horie was considered a symbol of a rising corporate Japan, where he made the bulk of his money through share deals. Horie built one of Japan’s top Internet empires by buying up companies in everything from financial services to real estate;
• He actively pursues corporate takeovers and wealth creation and had attempted a hostile takeover of Kintetsu Buffaloes baseball team in 2004, and a bid for radio station operator Nippon Broadcasting System in 2005;
• His dislikes suits and his trademark is his T-shirt and slacks;
• He is an enthusiastic self-publicist where he used his frequent television appearances to talk up his company, originally named Livin’ On the Edge, in 1996 with capital of $50,000;
• He captivated Japan’s corporate circles when he unsuccessfully launched an unsuccessful, bid for control of the Fujisankei media group which is the nation’s most watched TV network. A year ago, he even ran for parliament as an independent in lower house elections, but lost to Shizuka Kamei, a heavyweight former member of the ruling Liberal Democratic party.

Some Details of the Fraud Cases: 

• Horie is accused of falsely reporting a 5.03-billion yen pretax profit for the year ended September 2004 to hide losses of 310 million yen sustained by his company;
• He was also been accused of setting up dummy companies to hide Livedoor group losses and inflate the capital value of group companies in 2003 and 2004;
• There is another accusation that Livedoor ordered an affiliate to acquire a company under the parent company’s control and sell shares in it;
• Prosecutors alleged Horie violated securities law by collaborating with his colleagues in order to boost the firm’s share price and falsifying corporate accounts.
• According to the indictment, Horie ordered Livedoor’s former chief financial officer, Ryoji Miyauchi, and former director Fumito Kumagai to upgrade the profit forecast for the second quarter of 2004 from ¥3 billion to ¥5 billion;
• In addition to fraud charges, he also faces damage suits filed by former shareholders after Livedoor engaged a new management and was forced to delist following his detention;
• During the testimony Tuesday, Hiroshi Onishi, president of an investment fund, said he had been ordered on several occasions by a Livedoor executive to sell shares in the company to other firms he suspected were affiliated with Livedoor. Onishi testified Tuesday that his buying and selling was done at the orders of Hideaki Noguchi, who headed a finance unit of Livedoor. Noguchi was found dead in a hotel on the Japanese island of Okinawa in January in what the police say was a suicide. But Onishi later contradicted himself in cross-examination by a defense lawyer, Yasuyuki Takai.

Horie’s trial is expected to run 26 sessions through Nov. 28, with Miyauchi testifying as a key witness from Sept. 15 to 29. Kumagai will also testify at the 17th session on Oct. 17. If the trial proceeds as planned, the court is expected to rule on the case by February.
If convicted, Horie faces a maximum penalty of five years in prison or fines of ¥5 million, or $43,000, or both a prison term and fines.