Former dot-com mogul Takafumi Horie's 2 1/2-year prison sentence may have come as a surprise, considering most white-collar criminals are allowed to walk free, but some legal experts and Livedoor shareholders said Friday it was the right decision.</PARAGRAPH>
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<TD><FONT SIZE='1'><B>Former Livedoor Co. President Takafumi Horie is the focus of heavy media attention Friday morning as he
enters the Tokyo District Court to receive the verdict in his criminal trial.
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<TD><P ALIGN='CENTER'><FONT SIZE='3'><B>Livedoor, Horie timeline</B></FONT></P>
<CREDIT>Kyodo News</CREDIT>
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<I>Following are key events in the career of Livedoor Co. founder Takafumi Horie.</I><BR/>
<B>April 1996 </B> -- Horie sets up Web site design firm Livin' on the Edge Inc. while still at the University of Tokyo.<BR/>
<B>April 2000 </B> -- Livin' on the Edge is listed on the Tokyo Stock Exchange's Mothers market for startups.<BR/>
<B>November 2002 </B> -- Livin' on the Edge takes over operations of Internet service provider Livedoor Co.<BR/>
<B>February 2005 </B> -- Livedoor becomes unsuspecting radio broadcaster Nippon Broadcasting System Inc.'s biggest shareholder and starts a battle with Fuji Television Network Inc. for control of NBS, the largest stakeholder in Fuji TV.<BR/>
<B>September 2005 </B> -- Horie runs unsuccessfully in the House of Representatives election, tapped as an 'assassin' Liberal Democratic Party candidate by then Prime Minister Junichiro Koizumi.<BR/>
<B>Jan. 16-17, 2006 </B> -- Prosecutors without forewarning search Livedoor headquarters in Tokyo and several related locations on suspicion of securities law violations, triggering a landmark plunge on the Tokyo Stock Exchange.<BR/>
<B>Jan. 23 </B> -- Horie and Chief Financial Officer Ryoji Miyauchi and two other Livedoor executives are arrested on suspicion of spreading false information regarding subsidiary ValueClick Japan Inc.'s takeover of publisher Money Life.<BR/>
<B>Jan. 24 </B> -- Horie resigns as Livedoor president and is replaced by Kozo Hiramatsu.<BR/>
<B>Feb. 13 </B> -- Prosecutors indict Horie and the three others as well as Livedoor and Livedoor Marketing Co., ValueClick's successor.<BR/>
<B>Feb. 22 </B> -- The four arrested men are served with fresh warrants on suspicion of falsifying Livedoor's earnings for the business year to September 2004. Prosecutors also arrest Livedoor Representative Director Fumito Kumagai.<BR/>
<B>March 14 </B> -- Prosecutors file additional charges against the five men and Livedoor.<BR/>
<B>April 14 </B> -- The TSE delists Livedoor from the Mothers market.<BR/>
<B>May 26 </B> -- The trial of the four executives, excluding Horie, begins with Miyauchi pleading guilty and Kumagai pleading not guilty to some of the charges.<BR/>
<B>Sept. 4 </B> -- Horie's trial begins. He pleads not guilty.<BR/>
<B>Jan. 26, 2007 </B> -- The court finishes hearing evidence in trial.<BR/>
<B>March 16 </B> -- The Tokyo District Court sentences Horie to 2 1/2 years in prison.<BR/>
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<PARAGRAPH>People convicted of accounting fraud usually get suspended sentences. In one particularly big case, the ex-chairman of Kokudo Corp., Yoshiaki Tsutsumi, admitted to insider trading and falsifying then subsidiary Seibu Railway Co.'s 2003 financial statements. He received a suspended 30-month prison term in 2005. </PARAGRAPH>
<PARAGRAPH>Legal experts say Friday's ruling was a sign that the courts have begun to recognize they must be tougher on white-collar crime to maintain order in the stock market and keep investors' trust in it.</PARAGRAPH>
<PARAGRAPH>Toyo Atsumi, a professor emeritus of criminal law at Chuo University, believes the courts here have generally been too lenient on financial crimes compared with the United States.</PARAGRAPH>
<PARAGRAPH>'This was an organized fraud and a betrayal that victimized many investors,' Atsumi reckoned, adding he thought the court could have handed down the maximum four-year prison term that prosecutors had demanded. Livedoor's stock plummeted, as did other stocks, when prosecutors, without the usual forewarning, raided the company's offices in January 2006.</PARAGRAPH>
<PARAGRAPH>'It's a good example to let venture businesses understand that they need to follow the rules,' he said. </PARAGRAPH>
<PARAGRAPH>Atsumi also said that the ruling showed society that crimes committed by people with a good education but no ethics will be punished for damaging social stability.</PARAGRAPH>
<PARAGRAPH>Hiroshi Okumura, a former Chuo University commerce professor who has written extensively on big business, said the ruling shouldn't discourage young entrepreneurs because Livedoor was playing the stock market, whereas running a serious business is completely different.</PARAGRAPH>
<PARAGRAPH>Okumura criticized the media for praising Horie as a young entrepreneur who had brought about a new era in business, although he said people should also remember that Livedoor was simply taking advantage of vulnerabilities the companies it went after should have corrected.</PARAGRAPH>
<PARAGRAPH>He cited Nippon Broadcasting System Inc. as an example. In 2005, Livedoor tried to become the largest shareholder in midsize NBS, which was the top shareholder in the much bigger Fuji Television Network Inc., Livedoor's main target. </PARAGRAPH>
<PARAGRAPH>Okumura said the court will have to stay tough on fraud, citing the cases at Nikko Cordial Corp. and Sanyo Electric Co. This week, however, the Tokyo Stock Exchange surprised many by deciding not, as widely expected, to delist Nikko for accounting fraud.</PARAGRAPH>
<PARAGRAPH>Shareholders agreed sending Horie to prison was a good idea and cheered the sentence. </PARAGRAPH>
<PARAGRAPH>The shareholders who filed a 19 billion yen lawsuit against Livedoor, Horie and other former senior executives for losses when Livedoor stock plunged during the fraud probe said they were pleased.</PARAGRAPH>
<PARAGRAPH>'I was convinced that –
would be found guilty, but I was thinking maybe he would be handed a prison sentence of less than a year, so I was relieved," Ichiro Shimizu, who lost about 5 million yen on Livedoor shares, told a news conference.
"In my opinion, the ruling is acceptable. The court made a sound judgment . . . and I think sentencing him to 2 1/2 years is a heavy sentence."
Shimizu, 63, is one of the 3,250 shareholders who is part of the collective suit that aims to get back all of the money they lost by investing in Livedoor. Some of them suffered several hundred million yen in losses after the prosecution raids and Livedoor's subsequent delisting.
"The court denounced Horie's claim of innocence and ruled that he was the mastermind behind the accounting fraud . . . and the prison sentence was inevitable," said Chohei Yonekawa, a lawyer representing the shareholder plaintiffs. "I believe that the ruling will be of an advantage to us."
However, some of the plaintiffs said the judge wasn't tough enough.
"I think 2 1/2 years is not enough," Iwao Abe said. "This is where our real fight begins. We will do our best for a total victory."
The shareholders criticized Horie, who pleaded not guilty and has already appealed the sentence, for being unapologetic.
"I hope he will offer a sincere apology and compensate us for our losses," Shimizu said.
Reactions over Horie's guilty verdict varied on Internet bulletin boards.
One writer on "2 Channel," one of Japan's largest such sites, called the sentence too harsh, considering that Horie had no criminal record.
But others on the site claimed Horie deserved more than 2 1/2 years because he destroyed the lives of some Livedoor shareholders for good.
See related stories:
Horie handed 2 1/2 years
Good and bad seen from Livedoor fallout
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