The former president of the Internet services company Livedoor was charged with securities laws violations on Monday, the latest chapter in a scandal that has riveted Japan.
Takafumi Horie and three other executives of Livedoor Co. and subsidiary Livedoor Marketing allegedly used stock swaps and stock splits to artificially inflate stocks and gave false information about earnings.
Livedoor shares plunged 33 percent to close at 52 cents in Tokyo. Trading closed before the news of the indictments but Japanese media had been reporting for days that the charges were coming Monday.
Livedoor shares have plunged by 90 percent since a Jan. 16 raid on the company, which was followed by Horie's arrest a week later. Now in custody at the Tokyo Detention Center, he has repeatedly said he is innocent.
The charges were a stunning reversal of fortune for Horie, who had become a celebrity in Japan for his bold buyout attempts and brash manner. The cocky, T-shirt clad college dropout struck a contrast to Japanese business leaders of the past.
Horie, 33, appeared often on TV and ran for a seat in Parliament last year. He drew praise from some and disdain from others for being unusually forthright about his love for money and glamour in a nation dominated by a culture that sees virtue in selfless hard work.
Prosecutors also indicted the two companies, Livedoor and Livedoor Marketing, along with the four men.
The Livedoor scandal has been embarrassing for Prime Minister Junichiro Koizumi because the ruling Liberal Democratic Party had championed Horie as pushing economic reforms. Horie ran as an independent in lower house elections last year, and top LDP officials campaigned on his behalf.
After his arrest, Horie resigned from his post at Livedoor, which runs an Internet portal and grew through aggressively buying up other firms.
The scandal has prompted analysts and members of the public to say Japan needs clearer laws about securities as well as heavier penalties for padding company books.
Some blame the government for letting Horie test legal loopholes and limits because Livedoor's repeated stock splits and aggressive takeovers, now being scrutinized, were widely known.
Livedoor president Kozo Hiramatsu, who has replaced Horie, told reporters that "we take (the indictment) very seriously, and we find it extremely regrettable."