Presiding Judge Toshiyuki Kosaka said a prison term for Takafumi Horie, 34, was necessary as the act of willfully misleading private investors was a serious crime. However, Kosaka said he wasn't condemning everything Horie had done as an entrepreneur.

"I want you to make up for what you've done and start anew," Kosaka said.

Livedoor's securities scandal rocked the nation and has been dubbed: the Enron of Japan, in reference to the U.S. company that declared bankruptcy in 2001 due to widespread accounting fraud. Many private investors who had bet on Livedoor stocks saw their life savings evaporate as Livedoor shares took a nose dive. Horie was arrested just over a year ago and his company was delisted from the Tokyo Stock Exchange last April.

Horie's lawyers called the trial unfair and said the guilty verdict would damage Japan's entrepreneurial spirit. They plan to appeal the case.

Horie's lawyers petitioned the court for his release, which was granted on bail of ¥500 million ($4.3 million).