Horie charged with misleading investors

TOKYO — Livedoor prexy Takafumi Horie, the upstart Internet entrepreneur whose alleged business misdealings took the Tokyo Stock Exchange on a roller-coaster ride last week, was arrested Monday on charges of misleading investors with phony stock info.

Chief financial officer Ryoji Miyauchi, director Fumito Okamoto and Livedoor Finance Co. prexy Osanari Nakamura were taken into custody as well.

Probe into Livedoor’s business dealings started with allegations that a company affiliate, Livedoor Marketing, formerly known as ValueClick Japan, deceived investors and the public in claiming to take over publisher Money Life with a stock swap when in fact no stock was exchanged and the publisher was already a Livedoor group company.

Livedoor also was suspected of filing a false pre-tax report for fiscal 2004, claming profits of $12.3 million when it had actually lost $8.8 million.

Several other suspect takeover deals have since come to light, but the extent of Horie’s involvement is not yet known.

Miyauchi had earlier told investigators that Horie was not involved in the stock-swap scam, which was aimed at boosting the company’s stock price. Horie also denied wrongdoing in a message he posted Sunday on his blog.

Founded by Horie in 1996 with a stake of $50,000, Livedoor originally was called Livin’ on the Edge. That was also Horie’s motto for the next decade. He boosted his company’s value into the multibillion-dollar range through aggressive takeover deals, using Livedoor shares as collateral, while frequently splitting the stock to encourage investors to climb aboard the Livedoor bandwagon.

His boldest move was a two-month battle last spring to take over Nippon Broadcasting System, a radio company owned by the Fuji TV network.

Horie failed in his attempt, but he forced Fuji into a tie-up that, with Livedoor’s current troubles, is practically kaput save for Fuji’s $387 million investment in a 12.75% Livedoor stake, which is looking more like a writeoff with each passing day.

Livedoor’s market value plunged 52%, or $4.6 billion, in four days last week and forced the Tokyo Stock Exchange, unable to handle the volume, to suspend trading Wednesday.

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