The Tokyo High Court rejected Horie's appeal of a lower court conviction of securities laws violations. He was found guilty in March last year of masterminding a network of decoy investment funds to manipulate earnings at his Net services startup Livedoor Co.

Horie, 35, who has repeatedly said he is innocent, will take his case to the Japanese Supreme Court, his lawyer Yasuyuki Takai said after the ruling.

"We definitely cannot accept this decision," he said on nationally televised NHK news. "It is incomprehensible."

Also upheld Friday was the Tokyo District Court decision that sentenced Horie to 2-1/2 years in prison. In Japan, it is still quite rare for an executive to get a prison sentence for white collar crimes. Horie is out on bail.

At the time of the lower court ruling, the judge had said Horie and Livedoor had caused great damage to investors. The Tokyo company's false earnings reports had grave social consequences in wreaking havoc on Tokyo markets, the judge said.

The appeals court said it agreed with that ruling, arguing that Horie as chief executive played a key role in the dubious funds set up for stock swaps and other schemes to pad Livedoor books, according to Japanese media reports.