Former Livedoor Co. President Takafumi Horie and three of his former executives were charged Monday with spreading false financial information about the takeover of a publisher in 2004, prosecution sources said.
They are also accused of releasing inflated financial figures in November that year for affiliate Livedoor Marketing Co., then known as ValueClick Japan Inc., to lift its stock price.
Both would be violations of the Securities and Exchange Law.
The four are in custody, and prosecutors are expected to serve them new arrest warrants for allegedly padding the parent company’s profits for the year through September 2004, the sources said.
The fresh arrests will allow the Tokyo District Public Prosecutor’s Office to detain them for as many as 20 more days. Their custody at the Tokyo Detention House was to expire Monday.
Horie, 33, has denied any wrongdoing since his arrest Jan. 23, but it is rumored the three others have owned up to most of the charges and to Horie’s involvement.
Livedoor and Livedoor Marketing were also indicted on the same charges.
The three others indicted with Horie are former Livedoor Chief Financial Officer Ryoji Miyauchi, former Livedoor Director and Livedoor Marketing President Fumito Okamoto, and former Livedoor Operating Officer and Livedoor Finance Co. President Osanari Nakamura.
The four were arrested last month on allegations that they falsely announced in October 2004 that ValueClick Japan would acquire publisher MoneyLife Inc. through a stock swap, although it had already been bought by an investment union allegedly controlled by the Livedoor group.
The prosecutors suspect gains on sales of ValueClick’s stocks were transferred to the parent company, although it is not clear whether such an act is illegal under Japan’s vague securities laws.
Investment unions, also referred to as partnerships, do not have to be registered with authorities and were used in many corporate takeovers in stock swaps involving the Livedoor group.
The prosecutors also believe Fumito Kumagai, 28, Livedoor’s current representative director, may have played a part in the alleged fraud but don’t have any idea whether he can be held criminally responsible, the sources said.
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