Livedoor and Horie have steadfastly maintained their innocence. But there's no doubt that the scandal represents an epic comedown. In a country where true business mavericks are rare, Horie's story is already legendary. In 1996, after dropping out of Japan's most prestigious school, the University of Tokyo, he founded a website design consultancy with just $52,000, which he tellingly called Livin' on the Edge. Since then, he has built the company, primarily through mergers and acquisitions, into a Yahoo!-style Internet portal offering everything from e-mail and news to travel and concert tickets, auctions and online banking. Over the past five fiscal years, it has acquired 27 companies, increasing revenue 22-fold to nearly $800 million. Livedoor's stock has been just as gravity-defying, rising 26-fold in the five years ending in December 2005. Such aggressive growth through acquisitions is rare in Japan, as is Livedoor's habit of frequently splitting its stock so that small (and often naive) investors can afford to buy the shares. In one of the over 20 books he has written since 1998, Horie declares: "Being a shareholder means being a fan ... Livedoor's share price has become affordable to even grade-school children due to stock splitting ... The reason Livedoor kept splitting its stock is because I wanted young people without a lot of money to be shareholders." Such practices made Horie suspicious to many old-fashioned Japanese businessmen (not to mention money managers worldwide). But, until last week, his gift for promoting the stock served him and his shareholders well. In December 2005, his 17% stake was worth $1.2 billion.

Young, cocky and charismatic CEOs like Horie have cut an increasingly high profile in Japan of late. Eschewing the business practices of old-school Japan Inc., which put a premium on consensus-building, back-scratching and maintaining stability at the expense of efficiency and profits, these new-era leaders have espoused a purportedly American style of business, in which survival of the fittest rules and hostile takeovers are just routine tools in corporate competition. The business establishment's reaction has been utter revulsion. Many business leaders who still consider manufacturing the only respectable industry have accused the Internet and services firms of playing a "money game," rather than building tangible products. For many Japan watchers, the clash of business cultures has become far more interesting than the actual economic impact of these upstart companies. Patrick Mohr, head of quantitative research at Nikko Citigroup in Tokyo, says the psychological importance of Japan's young Internet guns has been tremendous: "The symbolism of someone who's been one of the most aggressive, vocal movers and shakers in Japan getting put down by old Japan is hard to miss. For a lot of young people in Japan, Horie was a hero. He was an incredibly successful 33-year-old. He was the symbol of entrepreneurial vitality, which is what the country needs."

Horie has always been a primary focus of the establishment's ire. Improbably, the chubby, self-avowed geek has adopted the trappings and aura of a rock star. He wears designer T shirts and $400 jeans rather than a business suit. He drives a Ferrari. He dates models and actresses. He is notorious among reporters for being a prickly and condescending interview subject. Yet he could also be tremendously charming, clowning around on quiz shows and starring in one of Livedoor's most popular TV ads. The range of his projects and interests seemed inexhaustible and always kept him in the news. One day, he bought a racehorse; another, he announced a private space-tourism venture; he even revealed that he was recording a music CD.

Horie's books were equally eye-catching, with brash titles like Earning Money is Everything: From Zero to 10 Billion Yen My Way, Winning is Earning and Be the World's Richest! Reading Horie is an amazing experience, a glimpse into a soul unburdened by self-doubt, devoid of self-awareness, oblivious to irony. Often, he seems to veer into megalomania. "I don't think I'm going to die," he confides in one book. "At the current rate of scientific research, isn't it possible that they'll come up with a way to do away with death, if you pump enough money into it?" Perhaps it's all a pose, but in retrospect, his writing is riddled with what now look like red flags. In one book, Using Cash Flow Management to Become Number One in the World, he and a coauthor declare: "All that we do is aimed at achieving the simple, central goal of making [BRACKET {Livedoor}] No. 1 in terms of market capitalization." Horie apparently has nothing else in mind—no superfluous things such as philosophy or aesthetics. Throughout his writings, he comes off as a man whose priorities are way out of whack. "There's nothing money can't buy," is a phrase he repeats like a mantra.

Before long, the war between Horie and the Squares had become a self-reinforcing cycle. The more Japan's business élite called him a punk, the more he'd say things such as "All evils come from aged business managers." The more often his deal-making style was called into question, the more daring his takeover attempts became. In 2004, he tried to buy the Kintetsu Buffaloes, a financially struggling team in Japan's professional baseball league. The league's old-boy owners club quickly squashed that move. But Horie shrugged off this setback, saying the attempt had been good for business anyway. He explained: "What I care about most is the publicity the company gets."

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