Flamboyant dotcom tycoon Takafumi Horie on Friday lost his appeal against a prison term for a fraud scandal that rocked Japan's stock market, with the judge accusing him of lacking social graces.

The Tokyo High Court kept a two-and-a-half year prison term imposed by a lower court in March 2007 on Horie, the young founder of formerly high-flying Internet firm Livedoor.

The brash 35-year-old was once a darling of the Japanese media which portrayed him as a harbinger of a new, rougher style of business in a country known for consensus.

"The defendant has a flimsy sense of standards and lacks any grace," presiding judge Tetsuji Nagaoka said as he handed down the appeal verdict.

Horie's lawyer Yasuyuki Takai voiced outrage at the judge's description, saying that his client was being punished for being confident in his own innocence.

"For this belief of his to be reflected in the verdict shows that this is not a trial in a modern nation," Takai told reporters.

Horie and web portal Livedoor were accused of falsely reporting a pre-tax profit of five-billion yen ($47-million) to hide actual losses as the firm launched an aggressive bid to take over the country's top broadcaster.

The Livedoor scandal briefly sent the Tokyo stock market plunging in 2006, forcing it to close early for the first time ever.

Horie, who continues to plead his innocence and is out on bail, did not show up in the courtroom to hear the verdict.

His lawyers immediately appealed the decision to the Supreme Court, arguing that the case was minor compared with other financial scandals in Japan that caused major financial losses.

But the judge said on Friday that he found testimony from Livedoor's former Chief Financial Officer, Ryoji Miyauchi, to be "highly credible." Miyauchi, once Horie's right-hand man, admitted to the alleged fraud as part of a plea bargain with prosecutors.

"In the cases both of accounting fraud and falsifying reports, the defendant had criminal intentions and complicity from accomplices," Nagaoka said.

Horie has refused any plea bargain and insisted the trial was revenge by a rattled establishment. His reaction was unusual in Japan, where it is standard for defendants to apologise in return for more lenient treatment.

His money could buy him anything

Horie's bare-knuckles style had earlier turned him into a media darling. He wore T-shirts to business meetings, drove a Ferrari around Tokyo and often bragged that his money could buy him anything.

He ran unsuccessfully for parliament with the blessing of former reformist premier Junichiro Koizumi, who had hoped that Horie would win a seat from one of his top opponents within the party.

But despite his boastful style, Horie's highest profile corporate acquisition attempts never worked out in the end.

He failed to acquire a popular baseball team. His attempt to take over Fuji Television, Japan's most watched network, ended in a truce when the station reluctantly bought Livedoor shares to form a tie-up.

AFP