Rajaratnam Sentenced To 11 Years
GUY RAZ, HOST:
From NPR News, this ALL THINGS CONSIDERED. I'm Guy Raz.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel. Eleven years in prison. That's the sentence handed down today by a federal judge for hedge fund billionaire Raj Rajaratnam. He was convicted of insider trading. And 11 years appears to be the longest sentence ever for that crime. But as NPR's Jim Zarroli reports, it is also lighter than what prosecutors had wanted.
JIM ZARROLI, BYLINE: Prosecutors told the judge that Rajaratnam, who headed the Galleon Group hedge fund, was the modern face of illegal insider trading. He had built up a network of insiders at companies like IBM and Intel, and then made tens of millions of dollars off the information they gave him.
And prosecutors asked federal Judge Richard Holwell to sentence him to as much as 24 years in prison. The judge stopped well short of that, pointing out that Rajaratnam had a long history of philanthropic work, not to mention advanced kidney disease. But the sentence the judge handed out was no slap on the wrist either, says former federal prosecutor Robert Mintz.
ROBERT MINTZ: In the pantheon of insider trading sentences, this is certainly among the most severe.
ZARROLI: While Rajaratnam looked on impassively, Judge Holwell said his crimes reflect a virus in our business culture that needs to be eradicated. Then he ordered him to pay a fine of $10 million and forfeit $53 million in illicit profits. That was in addition to the 11-year prison sentence, which Rajaratnam will have to serve at least 85 percent of. Mintz notes that the 54-year-old Sri Lankan-born billionaire is by far the biggest person targeted in the Justice Department's ongoing campaign against insider trading. And Mintz says that with the sentence, the judge clearly hope to send a message.
MINTZ: Really, I think what he tried to do was come up with something that he thought was fair given the individual circumstances of this defendant, but also an acknowledgment that a signal had to be sent here to others who might be contemplating committing a similar crime.
ZARROLI: Rajaratnam was convicted in May of conspiracy and securities fraud. The case against him was based on the testimony of some of his accomplices, but also on numerous wiretapped phone conversations. Columbia University Law School Professor Dan Richman says the use of wiretaps suggests how far the government is willing to go to pursue insider trading.
DAN RICHMAN: Straightforward insider trading cases are something the government is ready and eager to bring, and that it will resort to many of the same tactics that were used in organized crime or corruption cases.
ZARROLI: Despite the evidence against him, Rajaratnam never acknowledged any responsibility for his crimes. He argued in a pre-sentencing report that there is a thin line between seeking inside information and conducting legitimate research into a stock's prospects. But prosecutors said the evidence suggested he knew all too well that his actions were illegal. One witness said that in exchange for tips, Rajaratnam had paid him a half million dollars through an offshore account in his housekeeper's name.
Rajaratnam is now appealing his case and has asked Judge Holwell to postpone his sentence until the appeal is heard, but the judge ordered him to report to prison officials on November 28. He's expected to be sent to the same North Carolina facility, where Bernie Madoff is now serving a life sentence. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.