2ND LD: Livedoor eyes damages suit against Horie, other ex-execs.

TOKYO, March 23 Kyodo

(EDS: RECASTING AND INCORPORATING STORIES HEADLINED 'LEAD: FUJI TV SET TO SUE LIVEDOOR FOR 38 BIL. YEN' and 'COURT CONVICTS 2 ACCOUNTANTS, LIVEDOOR OF ACCOUNTING FRAUD')

Livedoor Co. emphasized its willingness Friday to seek damages from its convicted founder Takafumi Horie and other former top executives as a court has made a series of judgments condemning accounting fraud by the once high-flying Internet and financial services company.

Livedoor's current management will finalize whether to sue the former leadership after reading a final report to be compiled by an outside investigation panel by the end of next month, President Kozo Hiramatsu said at a news conference.

The Tokyo District Court on Friday closed a series of high-profile trials connected to the accounting scandal by imposing a fine on Livedoor and finding guilty two accountants who were in charge of the company's financial statements that inflated profits by more than 5 billion yen ($42.46 million) for the year through Sept. 2004.

The court earlier convicted Horie and four other former Livedoor group executives for their roles in the profit-padding and other securities law violations including stock market manipulation.

''We will pursue their responsibility if necessary,'' Hiramatsu said.

Horie, the former president who was given a 30-month prison sentence on March 16, pleaded not guilty and has appealed the ruling with the Tokyo High Court, while former Chief Financial Officer Ryoji Miyauchi, who admitted to the charges, also lodged an appeal immediately after the district court handed him a 20-month term on Thursday.

Former Representative Director Fumito Kumagai is also appealing his suspended prison term received Thursday. Former Livedoor Finance Co. President Osanari Nakamura and former Livedoor Marketing Co. President Fumito Okamoto also received suspended terms on Thursday.

On Friday, the district court fined Livedoor 280 million yen and Livedoor Marketing, now called Media Innovation Co., 40 million yen over the group's accounting irregularities.

''The crime was implemented in an organized way, with the management playing a leading role,'' the court said in the ruling. ''Livedoor deceived investors, failing to serve as a responsible publicly traded company.''

Hiramatsu said the ruling pointed to the serious responsibility of Livedoor as a company.

''We humbly accept the ruling...and have no intention to appeal it,'' the president said. ''We will continue to press for a posture of compliance and strive to regain public trust.''

The court also sentenced a certified public accountant to 10 months in prison for being involved in the accounting fraud and gave another a suspended term.

The accountant, Taishin Hisano, who was charged with approving Livedoor's false financial statements despite knowing of its illicit window-dressing, had pleaded not guilty. The court also sentenced his supervisor, Motoshi Kobayashi, to one year in prison, suspended for four years.

Hisano immediately appealed the ruling.

Livedoor is now under a barrage of criticism that its former management deceived financial market participants, with individual investors filing a series of damages suits against the company.

So far it has been sued in a total of 11 cases for around 30 billion yen in damages and is expecting more to come with the requested amount of compensation to double, Livedoor said.

Trust banks entrusted by investors with managing their stocks have also brought cases to court.

Similar moves can be seen among companies.

Fuji Television Network Inc. plans to file a 38 billion yen damages suit against Livedoor next week, sources close to the matter said.

Fuji TV, one of Japan's largest private broadcasters, has said it incurred huge losses on sharp declines in Livedoor share prices after prosecutors raided the Net firm in January 2006. Livedoor was delisted by the Tokyo Stock Exchange in April the same year after the accounting scandal surfaced.

The TV broadcaster had obtained Livedoor shares for 44 billion yen before selling them to Yasuhide Uno, the president of cable broadcaster Usen Corp., for only 9.5 billion yen.

It is expected to seek the loss of 34.5 billion yen plus additional money as Livedoor had rejected Fuji TV's requests for compensation, the sources said.

Asked about Fuji TV's possible move at the news conference, Hiramatsu said only that he would like to refrain from making any comment on the possibility.

The district court has found that Horie and other former executives conspired to pad the group's pretax balance by reporting about 5.3 billion yen in profit for the year through September 2004 when a 300 million yen loss should have been stated.

The company inappropriately posted profits of 3.7 billion yen from sales of its own stock and also booked 1.6 billion yen in profits from false business transactions by two companies it had planned to buy, according to the court's ruling.

The court also acknowledged Livedoor spread false information on the acquisition of a publisher in 2004 to raise the group's stock prices.