[JURIST] Former Galleon Group hedge fund executive Raj Rajaratnam [JURIST news archive] on Monday began serving his prison sentence at a Massachusetts military base. A judge in October sentenced [JURIST report] Rajaratnam to 11 years in prison, fined him $10 million and ordered he forfeit an additional $53.8 million. The 11-year sentence was significantly lower than the 24 1/2-year sentence requested by prosecutors and less than the 19 1/2-year minimum indicated by the non-obligatory federal sentencing guidelines. Even so, Rajaratnam’s sentence is the longest term ever imposed for insider trading and is part of a trend of tougher sentences for white-collar criminals precipitated in part by the federal sentencing guidelines which Congress passed in 1987. Calling his crime an assault on free markets and a virus in business culture in need of eradication, Judge Richard Holwell cited Rajaratnam’s charitable financial help for victims of the tsunami in Sri Lanka, the earthquakes in Pakistan and the 9/11 attacks, as well as his impeding kidney failure due to advanced Type II diabetes as reasons for the comparatively lenient sentence.
Rajaratnam was convicted of 14 counts of insider trading [JURIST report] in May in the largest hedge fund insider trading case in US history. Several other defendants have pleaded guilty in connection with the case. Danielle Chiesi pleaded guilty [JURIST report] in January. Former IBM senior vice president Robert Moffat was sentenced to six months in prison in September and ordered him to pay a $50,000 fine for his role in the scheme after pleading guilty [JURIST reports] in March 2010. Former Intel Capital executive Rajiv Goel pleaded guilty [JURIST report] to insider trading charges in February 2010. Rajaratnam, Chiesi, Goel and Moffat were arrested in October 2009 and charged [complaint, PDF] along with two other individuals and two business entities with insider trading. The complaint alleged that the individuals provided Galleon Group and another hedge fund with material nonpublic information about several corporations upon which the funds traded, generating $25 million in illicit gain. Rajaratnam and Chiesi originally pleaded not guilty [JURIST report] in December 2009 after being indicted for insider trading.