Raj Rajaratnam Sri Lanka remarkable journey high in the world of hedge funds criminal ended Thursday, when he was sentenced to 11 years in prison, the longest term ever imposed in a case of insider trading.
In a moment the government campaign to stamp what he calls the rampant illegal trade on Wall Street, U.S. District Judge Richard Holwell in New York, said during the sentencing of billionaire investor crimes, "describing the virus of our corporate culture, which is eradicated. " The judge also ordered Mr. Rajaratnam, who was convicted of securities fraud and conspiracy in May to pay $ 10 million fine and will lose $ 53.8 million. Defense plans to appeal.
The award caps a case that captivated Wall Street and corporate America for almost two years, replete with a cast of colorful characters and the drama that includes a tip of a Warren Buffett investment in Goldman Sachs Group Inc, allegedly sent by a M. Goldman director Rajaratnam at the height of the financial crisis of 2008.
Mr. Rajaratnam, 54, is the best person to be prosecuted in the government's general crackdown on insider trading. After declining to take the stand at trial, he went on the opportunity to speak when offered a chance at the sentencing hearing Thursday. "No, thank you, your honor," said Mr. Rajaratnam, sit down quickly again.
Rajaratnam's lawyers asked that his client will be sent to Butner Federal Correctional Complex in Raleigh, North Carolina, where Bernard Madoff Ponzi sentenced system operators serving a sentence of 150 years.
The resort occupies a central place in Butner doctor. In a court filing on behalf of Rajaratnam, who suffers from anemia and type 2 diabetes, which caused nerve damage and kidney, and had a severe stroke in February 2007. His doctors are looking for a kidney transplant.
"It's a sad end to what once seemed a brilliant history," Preet Bharara, the US Attorney in Manhattan, said in a statement. He added, "Privileged professionals do not receive a free passage to pursue profits through corrupt means."
The phrase means that the final solution for an extraordinary fall from grace.
The son of a factory manager sewing machine, Mr. Rajaratnam told people her name means "King of Kings." He entertained friends stories about his upbringing, such as his family had to dodge bullets during the civil war in Sri Lanka. He attended college in England, and later earned a master's degree from the Wharton School of the University of Pennsylvania.
He began his career in the investment world, when the technology boom was very young as an equity analyst at Needham & Co., cultivating contacts in early 1990 with the Silicon Valley community of Indian expatriates and use them to address technical staff. Later, some of these initial contacts leading to the advice that became a trademark of Rajaratnam is.
He created the hedge fund Galleon in 1997 and began with a meeting in the day traders and analysts on the grill for everything that can bring back the shares. Sometimes, he knew more than the analysts on the earnings of a company, his colleagues.
The company became known as the double-minded culture. Employees have received a massage in the office on Thursday. Super Bowl weekend in 2007, leased the manor Galleon exclusive Star Island in Miami Beach, and $ 250,000 a week, and technology executives familiar with the rental dates around the pool, according to people familiar with the the situation.
Others have visited a large shower for a show of all-female sex, said people familiar with the subject. A spokesman for Mr Rajaratnam's legal team declined to comment.
Mr. Rajaratnam also had a penchant for highjinks. He immediately offered $ 5,000 to employees who would be willing to be shocked with a Taser stun, when the leaders of Taser International Inc. came to visit the company, according to people who were there. A female trader prevailed over the offer and staff gathered around the stun gun was used, his legs buckling beneath her.
His insider-trading troubles took root in 2007, after he provided documents to the Securities and Exchange Commission in connection with an investigation of a younger brother that never resulted in charges.
Tucked away in them was a text message that launched what would eventually become the largest insider trading investigation ever: Don't buy Polycom's stock "till I get guidance; want to make sure guidance OK," wrote Roomy Khan, a former Intel Corp. employee who had long been suspected by the authorities of providing inside information to sources.
In November 2007, confronted with the text, Ms. Khan agreed to work with authorities, becoming the first in a series of cooperating witnesses who would help the government convict Mr. Rajaratnam and close Galleon after Mr. Rajaratnam's arrest on Oct. 16, 2009. Ms. Khan pleaded guilty to securities fraud, conspiracy and obstruction of justice, and is awaiting sentencing.
Mr. Rajaratnam's case was full of colorful characters. Danielle Chiesi—a former beauty queen and a brassy hedge-fund manager who swapped insider tips with Mr. Rajaratnam—allegedly slept with some of the individuals with whom she is alleged to have swapped inside information, according to court filings in the case.
Anil Kumar, a former McKinsey & Co. partner with a regal air, collected $2 million for tips he provided to Mr. Rajaratnam after the fund manager told him he was underappreciated at McKinsey, prosecutors alleged.
Ms. Chiesi pleaded guilty to conspiracy to commit securities fraud and was sentenced to 2½ years in prison. Mr. Kumar pleaded guilty to securities fraud and conspiracy, cooperated, and is awaiting sentencing.
On Thursday, Mr. Rajaratnam showed no emotion as the sentence was pronounced in a packed courtroom at the federal courthouse in lower Manhattan. His wife, seated in the third row wearing an off-white trench coat, stared ahead.
Thirty minutes later, as Mr. Rajaratnam made his way with his lawyers to meet a throng of waiting photographers and TV cameras, he appeared stunned.
The 11-year sentence falls far short of a range sought by prosecutors, who had argued that Mr. Rajaratnam should get up to 24 years and five months. Still, it exceeds the previous record of 10 years for insider trading, given last month to Zvi Goffer, a former Galleon trader convicted in a related scheme.
Thursday's action comes amid considerably harsher sentences for insider trading in recent years. In the past two years, defendants sent to prison on insider-trading charges in New York federal courts have received a median sentence of about 2½ years, an analysis of 108 insider trading cases by The Wall Street Journal shows. That's up from an 18-months median in the past decade.
At the hearing, assistant U.S. Attorney Reed Brodsky described Mr. Rajaratnam as the "modern face of insider trading."
Lawyers representing Mr. Rajaratnam, whose net worth once was an estimated at $1 billion, argued for a sentence of no more than eight years and a month. Family members, friends and associates wrote the court more than 200 letters to support him.
His lead lawyer, John Dowd, didn't appear. Terence Lynam, another lawyer, cited his client's charitable giving and work with a Harlem youth organization.
"Raj Rajaratnam has attempted to make the world a better place," Mr. Lynam said. "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."
Judge Holwell said the sentence was "sufficient but not greater than necessary." He cited Mr. Rajaratnam's health. But he denied a bid by Mr. Rajaratnam to remain free on bail while his appeal is considered and told him to report to prison Nov. 28.
During the trial, which began in March and ended in May, witnesses described a fund manager who systemically developed relationships from which he could extract inside information.
In a dramatic moment, prosecutors alleged that Mr. Rajaratnam gained access to information about a $5 billion investment in Goldman by Berkshire Hathaway Inc. during the financial crisis.
In one tape played at trial, Mr. Rajaratnam called a contact and said: "I heard yesterday from somebody who's on the board of Goldman Sachs that they are going to lose $2 per share." The government is investigating former Goldman director Rajat Gupta, who has denied wrongdoing.
Mr. Rajaratnam's legal team argued that the information provided by his contacts wasn't material and was already public. Mr. Dowd questioned the witnesses' credibility and said one, Mr. Kumar, told a "monstrous lie." In the end the jurors didn't buy it, convicting him after 12 days of deliberation.