Raj Rajaratnam, a former billionaire described by the government as “the modern face of illegal insider trading,” was sentenced Thursday to 11 years in prison.
The scandal including trading of stock in numerous companies and also included former IBM executive Robert Moffat. Seen as a potential replacement for IBM chief executive Sam Palmisano, Moffat left the company and later pleaded guilty to leaking tips to Rajaratnam co-defendant and New Castle Funds LLC analyst Danielle Chiesi. Moffat said he had an “intimate relationship” with Chiesi and said she had “played him” to get inside information.
The sentence for Rajaratnam was longest insider trading sentence ever but far short of the two decades sought by prosecutors.
Rajaratnam, 54, is the central figure in what federal investigators called the largest hedge fund insider trader case in U.S. history. The Galleon probe, which leveraged the widespread use of FBI wiretaps for the first time in such an inquiry, led to convictions of more than two dozen people. Prosecutors said he made more than $72 million by using illegal tips to trade in stocks of companies including Goldman Sachs Group Inc., Intel Corp., Google Inc, ATI Technologies Inc. and Clearwire Corp.
Rajaratnam also was fined $10 million by U.S. District Judge Richard J. Holwell, who said he concluded that Rajaratnam made well over $50 million in profits from his illegal trades.
“His crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated,” Holwell said.
The Sri Lanka-born Rajaratnam, 54, was ordered to report to a yet-to-be-designated prison on Nov. 28.
The judge gave Rajaratnam leniency, citing his need for a kidney transplant and his advanced diabetes. And he credited Rajaratnam’s charity work, which he called “the defendant’s responsiveness to and care for the less privileged.” The judge cited Rajaratnam’s work to help victims of the earthquake in Pakistan and Sept. 11, among others.
For more details, read The Associated Press story here.
For the Bloomberg report, read here.
The AP and Bloomberg contributed to this report.
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