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August 10, 2011
Sentencing debate joined for Raj Rajaratnam in high-profile insider trading case
As detailed in this Bloomberg news report, which is headlined "Rajaratnam Prison Sentence of More Than 24 Years Sought by Prosecutors," a high-profile insider trading case is getting closer to sentencing. The parties have apparently filed initial sentencing memos, and here is how this Bloomberg report describes the terms of the sentencing debate:
Galleon Group LLC co-founder Raj Rajaratnam, labeled by prosecutors as the “face of illegal insider trading,” should spend as long as 24 years and five months in prison, the U.S. told the judge who will sentence him.
Lawyers for Rajaratnam, in a separate court filing yesterday, asked U.S. District Judge Richard Holwell in Manhattan for a prison term “substantially below” what federal guidelines recommend. Rajaratnam’s attorneys, citing their client’s poor health, urged Holwell not to force him to die in prison.
Rajaratnam, 54, was convicted in May of all 14 criminal counts of conspiracy and securities fraud he was charged with. He’s scheduled to be sentenced Sept. 27.
Prosecutors said he should serve at least 19 years, seven months in prison. “Rajaratnam repeatedly leveraged the power of money and his position as the head of a $7 billion hedge fund to induce friends, employees and associates to participate in his criminal activities,” Justice Department lawyers said in their sentencing memorandum yesterday. “He is the modern face of illegal insider trading.”
Prosecutors called Rajaratnam the most “egregious violator” of insider-trading laws ever to be caught. He engaged in a seven-year conspiracy to trade on inside information from corporate executives, bankers, consultants, traders and directors of public companies including Goldman Sachs Group Inc. (GS), they said. He gained $63.8 million as a result of the scheme, according to the government....
Prosecutors called Rajaratnam a “fundamentally deceptive and dishonest person.” They said he lied under oath in a civil deposition and told others how to avoid detection. They also urged the judge to send a message of “deterrence” to combat the “rampant insider trading during the last several years.”
“Rajaratnam represents the worst of illegal insider trading,” prosecutors wrote. They compared him to Enron Corp.’s Jeffrey Skilling and WorldCom Inc.’s Bernard Ebbers, convicted in what prosecutors called “the worst of accounting frauds,” and Bernard Madoff, who they said represents “the worst of Ponzi schemes.” Skilling was sentenced to 24 years, Ebbers to 25 years, and Madoff to 150 years....
“Mr. Rajaratnam is not a healthy man,” his lawyers wrote, citing “significant and challenging medical issues” that are known to the court’s probation department. “His death will be hastened by a term of imprisonment,” they said.
Rajaratnam’s lawyers submitted letters on his behalf from his family members, former business associates, ex-employees and even his apartment doorman. Some of the letters detail what the defense said is more than $45 million in charitable donations by Rajaratnam in the U.S. and abroad, including millions of dollars to help victims of a tsunami that devastated his native Sri Lanka....
The defense argued that Rajaratnam’s crimes are “not in the same league” as those committed by Enron or WorldCom executives “since those defendants betrayed their own shareholders and employees.” Rajaratnam did nothing to harm his investors, [his lawyers] wrote. [They] also said that Rajaratnam’s sentence should be consistent with those imposed on others convicted of insider trading, including former New Castle Funds Analyst LLC Danielle Chiesi, a co-defendant who was sentenced on July 20 to 2.5 years behind bars.
August 10, 2011 at 03:19 PM | Permalink
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"Some of the letters detail what the defense said is more than $45 million in charitable donations by Rajaratnam in the U.S. and abroad, including millions of dollars to help victims of a tsunami that devastated his native Sri Lanka...."
How easy it is to give away money you never earned, but got only by cheating.
Not that he'd miss it anyway. If he made $63.8 million from the scheme, and gave away $45 million, that means he cleared $18.8 million.
Poor guy! Only a tad over $18 million in ill-gotten gains to live on. Will life's hardships never cease? The guy lives like a king, but he's a VICTIM, I tell you! It's only come to this because of those scalp-hunting, ambition-laden, Nazi-thug prosecutors.
Hey, look, he's a "first time, non-violent offender," in the undying words of the NACDL word processor. And what about over-federalization -- wouldn't want to forget that!
Plus, dontcha know, "Mr. Rajaratnam is not a healthy man." Well, I guess so. If I'd been caught pulling off the same rampant greed he got caught doing, I wouldn't feel too good either.
Yeah, well, whatever. Let the excuses begin!
Posted by: Bill Otis | Aug 10, 2011 5:37:17 PM
I think this is a great post. One thing that I find the most helpful is number five. Sometimes when I write, I just let the flow of the words and information come out so much that I loose the purpose. It’s only after editing when I realize what I’ve done. There’s defiantly a lot of great tips here I’m going to try to be more aware of.
Posted by: abercrombie and fitch | Aug 11, 2011 2:30:43 AM
"Prosecutors called Rajaratnam the most “egregious violator” of insider-trading laws ever to be caught."
I think these prosecutors are speaking in hyperbole a bit here. The Milkin/Boesky/Siegel/Levin insider trading ring of the 1980s was much larger--hundreds of millions in illegal profits (in 1980's dollars) and just as egregious tactics. Painting every new high profile criminal as the latest Madoff or Skilling is great for the soundbite, but not always accurate.
Posted by: TJH | Aug 11, 2011 11:35:15 AM
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