TOKYO — Former dot-com mogul Takafumi Horie was found guilty of securities law violations today and sentenced to 2 1/2 years in prison in a case that has come to symbolize the challenges Japan faces in policing rising startups.

Horie was expected to appeal the Tokyo District Court ruling. He had pleaded not guilty, saying he had been framed, and he accused prosecutors of having targeted him for standing out too much with his brash, unconventional entrepreneurship.

Prosecutors had demanded a four-year prison term for the 34-year-old founder and former head of Internet services firm Livedoor Co., which Horie guided from unknown startup to household name. In Japan, executives convicted of such wrongdoing generally get suspended sentences and avoid time in prison.

Chief Judge Toshiyuki Kosaka said Horie masterminded an elaborate network of decoy investment funds that were "established for the purpose of evading the law" and to "manipulate Livedoor's accounting."

"At that point, the prosecutors' case was proven," he said.

Horie's trial, which opened in September, has drawn widespread media attention here because the outspoken millionaire, a glamorous celebrity prior to his arrest, had grown into a symbol of new entrepreneurship in Japan.

The nation has long boasted a corporate culture dominated by big-name companies that carried on business through a cozy network of group companies.

Some experts say new companies like Livedoor that made aggressive acquisitions were just beginning to emerge and Japan still lacked clearly defined laws to police such moves.

Horie tumbled from stardom when prosecutors raided his company last year and then arrested him. He was incarcerated for three months but did not sign a confession as most suspects tend to do in Japan, often to win lighter sentences.

Some Livedoor shareholders were pleased by the verdict, saying it recognized the financial damages they suffered because of the fraudulent accounting.

"I am little surprised because the ruling was harsher than I expected," Ichiro Shimizu, 63, a former stockholder, told national broadcaster NHK. "I think the court judged carefully just how large the damage was to the shareholders."

Horie was known for his cocky flamboyance that stood out among drab, old-fashioned executives, and he fascinated the public with his buyout attempts of a professional baseball club and a media conglomerate.

Livedoor, which operated an Internet portal and offered Web-related services, drew a large number of individual investors, partly because of Horie's fame.

Those investors, many of them amateurs at the stock market, took big losses when Livedoor shares nose-dived.

Horie's case has also received widespread attention because he asserted his innocence. Nearly all criminal trials in Japan end with guilty verdicts.

Other Livedoor executives, including former Chief Financial Officer Ryoji Miyauchi, who has pleaded guilty, are being tried on charges of securities laws violations. A ruling is scheduled Thursday in that case.

Horie's defense said prosecutors abandoned their duty by ignoring Miyauchi and others who were stealing from Livedoor.