Galleon Fund's Raj Rajaratnam is sentenced to 11 years in prison, fined $10 million and ordered to forfeit almost $54 million.
Hedge fund billionaire Raj Rajaratnam, accused of masterminding the biggest insider trading scam in U.S. history, was sentenced to 11 years in prison, considered the longest sentence for insider trading.
Rajaratnam, 54, founder of Galleon, which at its peak had over $7 billion in assets, who was convicted in May of nine counts of securities fraud and five counts of conspiracy, was also fined $10 million and ordered to pay nearly $54 million in restitution by Judge Richard Holwell, who concluded that he reaped over $50 million in profits from the illegal trades.
“His crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated,” Judge Holwell said, adding that the 11 year prison term was “highly likely to act as a strong and necessary deterrent.”
Prosecutors has sought 19 to 24 years, but the judge said he considered severeal mitigating factors, including Rajaratnam’s medical condition (he needs a kidney transplant and suffers from advanced diabetes) and his charitable "good works" in assisting vistims of the tsunami in Sri Lanka and the earthquake in Pakistan, in reducing his sentence below the nonbinding federal sentencing guidelines.
“Some form of forbearance, however constrained by circumstance, is fundamental to our system of justice and appropriate here,” Howell said.
The defense had pleaded for leniency citing his failing health and ailments. His lawyers submitted nearly 200 letters on Rajaratnam's behalf. "Raj Rajaratnam has attempted to make the world a better place," his lawyer Terence Lynam told the court. "If there is a ledger in one's life, he should have some credit to draw upon in that ledger now that things have gone bad."
Rajaratnam declined an opportunity to address the court at the sentencing hearing, saying, "No, thank you, your honor."
Rajaratnam’s trial singed several leading Indian American businessmen, most notably former managing director of McKinsey and Goldman Sachs board member, Rajat Gupta, as well as former executives of Intel, IBM and Morgan Stanley.
Preet Bharara, the U.S. attorney in Manhattan, who prosoecuted the case, said: "It is a sad conclusion to what once seemed to be a glittering story. We can only hope that this case will be the wake-up call we said it should be when Mr. Rajaratnam was arrested. Privileged professionals do not get a free pass to pursue profit through corrupt means."
Rajaratnam must report to prison on Nov. 28 until when he is confined to his home.
His lawyers have requested that Rajaratnam be detained at the Butner Federal Correctional Complex, North Carolina, where Bernard Madoff, who admitted to masterminding the largest Ponzi scheme in U.S. history, is serving out his 150-year sentence.