10 More Hedge Funders Who Fell In Trouble With The Law

rajaratnamHe’s not the only one…

Raj Rajaratnam was sentenced to 11 years in prison and a $10 million fine yesterday.Comparatively, he got off pretty easy – prosecutors were¬†seeking up to 24.5 years for allegedly taking $73 million in illicit profits, but it’s still the longest sentence ever handed down for an insider trading conviction.

This is not the first time that arrests and prisons sentences followed a hedge fund investigation (Bernie Madoff, anyone?). There’s been a slew of subpoenas served and arrests in the last year, as the FBI polished off a three-year insider trading probe.

But it’s not just insider trading or ponzi schemes that are putting these hedge funders in trouble with the law – they have received publicity on charges that range from soliciting prostitutes to issuing death threats.

We rounded them up.

Zvi Goffer

Hedge Fund: Trader at Galleon Group, later fired

Misdeed: Trying to bribe lawyers for secret information on deals and transactions; allegedly running an insider trading ring

Conviction: Securities fraud

Year Convicted: 2011

Sentence: 10 years

Tidbit: Goffer received the name 'Octopussy' because he had so many sources of information he was able to reach out to.

Source: Bloomberg

Sam Israel III

Name: Samuel Israel III

Hedge Fund: Founder of Bayou Hedge Fund Group

Misdeed: Allegedly defrauding investors of $450 million

Conviction: Fraud

Year Convicted: 2008

Sentence: 20 years, increased to 22 years

Tidbit: Israel actually faked his suicide before he was due in prison, and received an addition 2 years for becoming a fugitive.

Source: NYTimes

Danielle Chiesi

Name: Danielle Chiesi

Hedge Fund: Analyst at New Castle Fund

Misdeed: Passing on secret information gained through business contacts to Rajaratnam

Conviction: Conspiracy to commit securities fraud

Year Convicted: 2011

Sentence: 2.5 years

Tidbit: She's a former pageant queen, and described insider information as 'orgasmic.'

Source: WSJ, CBS

Richard Grubman

Name: Richard Grubman

Hedge Fund: Portfolio manager at Highfields Capital Management

Misdeed: Throwing a fit in a parking lot then throwing his car keys at the valet

Conviction: *Arrested for one night

Year Convicted: *not convicted, arrested in 2010

Sentence: Received a stay-away order from judge

Tidbit: He has a pretty lavish lifestyle - the keys he threw were to a 2007 BMW X5 SUV, and he was heading for the Blu restaurant at the Boston Ritz when the incident occurred.

Source: Boston Herald

Jeffrey Epstein

Name: Jeffrey Epstein

Hedge Fund: Founder of Financial Trust Co.

Misdeed: Paying for and having sex with underaged prostitutes

Conviction: Soliciting prostitutes

Year Convicted: 2008

Sentence: 18 months

Tidbit: He is also a registered sex offender, as many of the prostitutes he solicited were under aged.

Source: HuffPost

Tara Bryson

Name: Tara Bryson

Hedge Fund: Worked in investor relations at New Stream Capital

Misdeed: Police found 203 marijuana plants on her property

Conviction: Pleaded guilty to drug possession

Year Convicted: 2011

Sentence: Received 1 year of probation

Tidbit: Bryson's live-in boyfriend, Michael Hearl, received the blunt of the sentence - he's serving 2 years in jail.

Source: NYMag

Yoshiaki Murakami

Name: Yoshiaki Murakami

Hedge Fund: Founder of M&A Consulting, Inc

Misdeed: Used inside information on Nippon Broadcasting and internet company Livedoor to trade and earn profits of $25.5 million

Conviction: Insider trading

Year Convicted: 2007

Sentence: 2 years and a $9.4 million fine

Tidbit: His case is sometimes considered the 'Enron of Japan.'

Source: Channelnewsasia.com

Mark Kurland

Name: Mark Kurland

Hedge Fund: Co-founder of New Castle Fund

Misdeed: Participating in insider trading ring that passed information to Rajaratnam

Conviction: Securities fraud

Year Convicted: 2010

Sentence: 2 years 3 months, and a $900,000 fine

Tidbit: Danielle Chiesi, who worked for Kurland, was apparently in love with him.

Source: HuffPost, CNNMonday

Joseph Contorinis

Name: Joseph Contorinis

Hedge Fund: Portfolio manager at Jefferies Group's Paragon Fund

Misdeed: Insider trading

Conviction: Securities fraud and gaining an alleged $7 million in profits

Year Convicted: 2010

Sentence: 6 years

Tidbit: He was ordered to forfeit $13 million when he was sentenced.

Source: DealBook

Arthur Samberg

Name: Arthur Samberg

Hedge Fund: President of Pequot Capital Management

Misdeed: Allegedly trading on illegal information about Microsoft

Conviction: Settled with SEC

Year Convicted: Settled in 2010

Sentence: *None, paid a $28 million settlement

Tidbit: Pequot was once the biggest hedge fund in the world, with around $15 billion in managed assets.

Source: Bloomberg, NYTimes

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