Once a hero of young entrepreneurs, 33-year-old Japanese Internet tycoon Takafumi Horie now faces potential criminal charges amid investigations of his company, Livedoor, in a slide from grace that is taking the hopes of his young admirers with him.
His and his company's alleged misconduct in business dealings has sent shockwaves through the Tokyo stock market since the Tokyo District Public Prosecutors Office and the Securities and Exchange Surveillance Commission raided the firm's offices and Horie's apartment on Monday night.
A Livedoor group is accused of falsifying its earnings through illegal accounting practices. It reported a profit of ¥1.4 billion (US$12.2 million) for the 2004 financial year, which ended in September that year, when it was in fact in the red by about ¥1 billion.
Falsifying earnings reports to boost company stock prices is a violation of securities law. If proven guilty, Horie could face up to five years in prison or a ¥50 million fine.
Known for his hostile takeover attempts and shakeup of old-style Japanese business techniques, Horie retained his usual firm posture after the raids, saying his company would experience no negative impact from the investigation.
"The allegations are under the company's examination," he said. "We will continue normal operations. There is no particular problem with our business. We want to make business expansion efforts."
But the morning after the raids, the Tokyo stock market reacted fiercely to the news.
HALT TO TRADING
The sell-off orders were so numerous that they tested the capacity of the Tokyo Stock Exchange's computer system, causing the world's second-largest exchange to halt all trading and close 20 minutes early.
Horie shot to stardom in 2004 when he made a bid with another Internet firm, Rakuten, to form a professional baseball team.
Although the attempt failed, Horie won fans by taking on Japan's entrenched business and baseball establishment and began an aggressive campaign to increase Livedoor's sales and market value through a series of takeovers. In 2004 alone, it took over 16 companies.
Last year, Livedoor also dove into a fierce battle for radio's Nippon Broadcasting System Inc. While he ultimately failed to buy the company, Horie succeeded in business tie-ups with his bid competitor, Fuji Television Network Inc.
Nicknamed "Horiemon" because of a resemblance to the cartoon character Doraemon, the pudgy divorcee managed to climb not only the corporate ladder but also popularity rankings.
Besides making continuous media appearances, he also received a 2004 award for looking good in jeans while also seeing his trademark phrase "within my assumption" be named the best new and trendy word for last year.
Taking advantage of his popularity, the dropout from Japan's elite Tokyo University ran in September's general election on Prime Minister Junichiro Koizumi's request.
Horie unsuccessfully ran against Shizuka Kamei, a veteran politician and former policy chief of the ruling Liberal Democratic Party (LDP). Kamei has criticized Koizumi for inviting Horie to run since the charges against him and his firm surfaced.
Some LDP members are trying to distance the party from Horie by saying that the LDP never officially fielded or informally endorsed him, but that they simply assisted Horie's support of Koizumi's postal privatization.