Subsidiary to sue Japan's Livedoor and founder (AFP)

TOKYO (AFP) - Japan's scandal-hit Livedoor Internet firm was hit by the first lawsuit from a junior firm bearing its name, which is seeking multi-million dollar compensation.

Used-car dealer Livedoor Auto said it will seek 1.67 billion yen (15 million dollars) from Livedoor, its flamboyant founder Takafumi Horie and two other former executives over damages to its business due to the fraud charges against the parent firm.

It will be the first group company of Livedoor to sue the parent firm after the financial fraud scandal rocked Japan's Internet industry and the stock market.

The used-car dealership entered the Livedoor orbit, hoping to cash in on the name's value, just a few months before prosecutors raided Horie's company in January on charges of falsifying accounting records.

"The arrests and indictment defamed the company, damaged its ability to attract customers and deteriorated the company's business performance, leading to a significant decline in the company's value for shareholders," Livedoor Auto said in a statement.

Horie, 33, built one of Japan's top Internet empires by buying up companies in everything from financial services to real estate.

Livedoor Auto tried to market its name when Livedoor was at its prime by airing a television advertisement featuring Horie, then a media darling.

Horie, a former candidate for parliament known for his aggressive but unsuccessful takeover bids, was released last month on 300 million yen (2.6 million dollars) bail after spending three months in jail.

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