Tokyo prosecutors, who arrested Takafumi Horie last month, declined to confirm the report, which was also carried on Japanese TV.
Horie, 33, and three other Livedoor Co. executives were arrested on suspicion they gave false information about subsidiaries and covered up losses.
The arrest was a stunning fall for Horie, who had become a celebrity in Japan for his bold buyout attempts and brash manner. Horie had been widely seen as the face of a new corporate Japan, the antithesis of the stereotype docile Japanese salaryman, who unquestioningly took orders and clung to their jobs under a tradition of lifetime employment that had increasingly been cast off amid global competition and cost cuts.
Horie is now in custody at the Tokyo Detention Center.
The cocky, T-shirt clad college dropout struck a contrast to Japanese business leaders of the past. Horie appeared often on TV and ran for a seat in Parliament last year. He drew praise from some and disdain from others for being unusually forthright about his love for money and glamour in a nation dominated by a culture that sees virtue in selfless hard work.
After his arrest, Horie resigned from his post at Livedoor, which runs an Internet portal and grew through aggressively buying up other firms. Livedoor shares have plunged since his arrest, and momentarily sent the, although the stock market has since recovered.
The scandal has prompted analysts and members of the public to say Japan needs clearer laws about securities as well as heavier penalties for padding company books.
"It's a big well-known Internet company. It was one of the high-flyers that people thought was doing really well, and it turns out it may have been playing with the books, much like Enron," reports CBS News correspondent Barry Petersen.
Some blame the government for letting Horie test legal loopholes and limits because Livedoor's repeated stock splits and aggressive takeovers, now being scrutinized, were widely known.
Horie has repeatedly denied wrongdoing. "I have no recollection on any of the allegations. And I don't even know how to comment because I have no idea what kind of investigation the media reports are coming from. That's the situation," Horie wrote in his blog before his arrest.