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Prosecutors are poised to question top executives of Livedoor Co., including President Takafumi Horie, over alleged fraudulent practices apparently designed to expand the firm’s business, investigative sources said Thursday.

The Internet and financial services conglomerate is at the center of a high-profile probe being conducted by the special investigative squad of the Tokyo District Public Prosecutor’s Office.

Reports that the squad raided the company’s headquarters and Horie’s home, both in Tokyo, and other places Monday night sparked a massive selloff Tuesday and Wednesday on the Tokyo Stock Exchange that forced the bourse to close Wednesday’s trading early.

Prosecutors are believed to be trying to shed light on possible irregularities concerning the takeover of a publishing house by a Livedoor subsidiary about a year ago, as well as allegations that Livedoor itself cooked the books to show it had a profit in the September 2004 business year when it was in the red.

Livedoor, listed on the TSE’s Mothers market for startups, traces its origins to a firm Horie founded in 1996.

The 33-year-old president and chief executive officer is also a major investor in the company, controlling 17.25 percent as of September.

Other executives targeted by the prosecutors are Ryoji Miyauchi, 38, who worked in close concert with Horie as Livedoor’s chief financial officer in expanding operations, and Fumito Okamoto, 38, a Livedoor director who doubles as president of the subsidiary, Livedoor Marketing Co., which purchased the publishing house last January when it was called ValueClick Japan Inc.

On ValueClick’s publishing venture takeover, Miyauchi said, “I believe there was no illegality involved” and denied any involvement by Horie in the transaction.

On Thursday, Livedoor said it had found no wrongdoing during its internal investigation into ongoing allegations about the conduct of its group firm in connection with a 2004 takeover of publisher Money Life.

Livedoor released a statement shortly before the market opened Thursday saying the group firm ValueClick did not need to announce that shares of the publisher had been held by an investment fund when it announced the takeover of the publisher on Oct. 25, 2004.

The investment fund was not directly related with the Livedoor group, the Internet services firm said, disputing the charge that ValueClick had failed in reporting the fact.

Citing mostly sources close to the investigation, Tokyo media have reported since the scandal broke that Money Life shares had already been effectively held by the Livedoor group at the time of the announcement, because the investment fund was financed by Livedoor.

In its statement, Livedoor also defended ValueClick’s stock split in November 2004. It has been alleged that this move was aimed at lifting its stock price to take advantage of the higher price in the takeover of Money Life. The takeover was to be done via a stock swap.

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