Raj Rajaratam's appeal denied
A federal court has denied Raj Rajaratnam's request to remain free on
bail while he appeals his insider-trading conviction, a ruling that
forces the fallen hedge fund manager to report to prison on Monday.
Rajaratnam, the former head of the hedge fund Galleon Group, is set
to serve his 11-year sentence - the longest prison term to date for
insider trading - in a federal prison in Ayer, Mass.
In a last-ditch try to keep their client out of jail pending his
appeal, his lawyers appeared at the United States Court of Appeals for
the Second Circuit in Lower Manhattan on Wednesday. They argued that his
case raised substantial questions of law that mandated his release until
the appeal was resolved.
In a short order issued Thursday afternoon, the three-judge panel,
without explanation, denied Rajaratnam's request. During the hearing,
the judges had expressed concern that Rajaratnam was a flight risk and
could have an incentive to flee to his native Sri Lanka.
"Wouldn't he rather be living as a centimillionaire in his own
country rather than as a convict in a jail?" Judge Dennis Jacobs asked
Patricia A. Millett, a lawyer for Rajaratnam, at the hearing on
Wednesday. Beginning Monday, Rajaratnam will be living at the Federal
Medical Center Devens in Massachusetts. Rajaratnam, 54, was assigned
there because of his health problems. He has diabetes that could lead to
eventual kidney failure, according to medical records submitted to the
court.
The Devens prison is located about 200 miles from his luxury
apartment on Sutton Place in Manhattan, where he lives with his wife and
three children.
Rajaratnam's surrender to the Bureau of Prisons is a milestone in the
government's most prominent insider trading prosecution since the 1980s.
Federal authorities arrested Rajaratnam in October 2009, charging him
with orchestrating a multiyear insider trading conspiracy involving
senior corporate executives, management consultants and other hedge fund
managers.
In May, a jury found him guilty of securities fraud and conspiracy.
Between the criminal case and a parallel civil proceeding brought by
the Securities and Exchange Commission, Rajaratnam has been ordered to
pay about $157 million in fines, the largest penalty assessed so far in
an insider trading case. The pursuit of insider trading by federal
prosecutors appears to be continuing unabated. Before year end, the
government is expected to bring a new set of insider trading charges
against traders at Diamondback Capital Management and Level Global
Investors, according to a person with direct knowledge of the case who
spoke on the condition of anonymity because he was not authorized to
discuss it publicly.
The new cases are based in part on wiretapped conversations between
the traders and illegal tipsters, this person said. Dozens of secretly
recorded conversations between Rajaratnam and his accomplices also
formed the core of the evidence against him at trial.
New York Times |