(Associated Press via NewsEdge) Four former executives of disgraced Japanese dot-com company Livedoor were convicted of inflating earnings reports in a scandal that has destroyed one of Japan's highest-flying Internet startups.
The rulings followed Livedoor founder and former CEO Takafumi Horie's conviction last week on similar charges of securities laws violations and his prison sentence of 2 1/2 years. Horie, who had pleaded not guilty, immediately appealed the decision.
Ryoji Miyauchi, Livedoor's former CFO, was sentenced to 20 months in prison after he pleaded guilty. Three other former executives, who pleaded guilty to some of the charges, were given suspended prison terms.
The Livedoor scandal broke in January 2006, when prosecutors arrested Horie and other top executives on suspicion of securities laws violations. The news sparked a sell-off in the Tokyo stock market amid widespread shock over the apparent downfall of Livedoor and Horie, who had become a celebrity for his gutsy takeover attempts and flamboyant lifestyle.
The executives were accused of setting up a number of funds to do stock swaps and other stock trading to pad their books. Prosecutors said the complex set of schemes fabricated 5 billion yen ($42.5 million) in profit.
Presiding judge Toshiyuki Kosaka said Miyauchi was the chief architect of some of the schemes as No. 2 at Livedoor, but said Horie shared much of the blame because he was the chief executive.
Kosaka said that while the amount of fabricated earnings might have been relatively small, the crimes were serious because of the massive damage that the misleading reports about Livedoor's value had caused individual investors.
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