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As I and a throng of others waited to enter the courtroom of Judge Richard J. Holwell at 9:00 this morning, Raj Rajaratnam came walking by, a full 90 minutes ahead of his date with destiny. He was accompanied by his two lawyers only, no family members were present. For a man who was facing a possible 24.5 years in prison he looked stoic. Certainly not relaxed, but more as if he was simply bracing himself for what awaited him. Dressed as if he was about to step on the Galleon trading floor, in a blue suit, crisp white shirt, blue Hermes tie, and hair slicked back. At that point I couldn’t help but wonder about the toll these past few days, weeks, and months have taken on the man.
Before Judge Holwell entered the courtroom Raj sat ramrod straight at the defence table, the prosecution one table in front. You could here a pin drop.
This past May, Rajaratnam was found guilty of 14 counts of securities fraud and conspiracy. Not long ago he was running Galleon Group, one of the most powerful hedge funds in the world. Now, he is only moments away from receiving his date to report to a Federal prison.
Many of Raj’s cohorts and accomplices have already been sentenced for their roles in the running of one of the biggest insider trading rings in our lifetime. U.S. Attorney Preet Bharara’s campaign against insider trading on Wall Street has resulted in almost 50 arrests so far.
Raj will be going from his luxury apartment where he currently resides, a home where no comfort or material possession was spared, to a 7×7 cell. He once lived mere blocks from some of the most famous and expensive restaurants in NYC — soon he will be eating powdered eggs, uneatable mystery meat, and just about everything served will be of the processed variety. Prison is a humbling, humiliating, gut-wrenching existance.
Will there be many tears shed for this man? No, probably not. Let’s face it, Rajaratnam is not a sympathetic figure. For years he flouted his way through Wall Street, thumbing his nose at the SEC, the rules and regulations. Countless number of stocks bought and sold, massive profits wrung up under the guise of insider information. With all the red herrings and subterfuge he employed along the way (overseas bank account, code names, prepaid cell phones, etc) he obviously never thought he would be caught.
When I speak about prison, the men or women going off to serve their time, I often talk about the ripple effect it has on family and loved ones. So while Raj goes off to serve his lengthy term, most folks won’t lose a minute of sleep worrying about him. But his children and wife are also victims, for their lives will never be the same either.
Finally, at 10:30 a.m. on the dot, Judge Holwell emerges from his chambers. We all rise. Raj’s lawyer Attorney Terence Lynam speaks first, expressing to Holwell that Rajaratnam should receive credit for his numerous charitable works and he urges compassion for his Raj’s various illnesses: “A lengthy term of imprisonment will for sure shorten his life. He does not deserve to die in prison.”
Lyman talks about the 200 letters sent on Raj’s behalf from family, friends and associates from all over the world. He pleads for “a sufficient but not greater than necessary” sentence.
Next it was the prosecutions turn to speak. Assistant U.S. Attorney Reed Brodsky labelled Rajaratnam, ” The modern face of illegal trading, who has operated in a brazen, pervasive and egregious way.” “He is arguably the most egregious insider trader to face sentencing in a courthouse in the United States,” he said.
During this entire diatribe Raj continues to look straight ahead, determined. He shows zero emotion. Brodsky doesn’t hold back, he wants the maximum here. Right up to a possible 24.5 years. He doesn’t buy what the defence is selling about how Raj’s poor health and diabetes will be akin to a death sentence for the 54 year old.
Judge Holwell now gives Raj the chance to speak on his behalf. I’m thinking for sure he will take this opportunity to plead for mercy. But no. “Would you like to speak?” asks Howell. As his wife sits behind him staring at her husband, Raj stands up, faces the Judge, and says, “No thanks.”
The courtroom is silent, I think we are all surprised at this move. Raj has icy cold nerves. Still a trader, right to the bitter end. He’s giving no quarter.
Finally it is Judge Holwell’s time to speak.” Insider trading is an assault on the free markets,” he says.
“Your crimes reflect a virus in our business culture that needs to be eradicated,” he continued. He then suprisingly, hands down a sentence that is substantially less than what the prosecutors were asking for.
“I impose a sentence of 132 months.” He also fined $10 million and ordered him to forfeit $ 53.8 million. In imposing the lighter sentence, Holwell spoke of certain factors that went into his decision making. He spoke of Rajaratnam’s good works and financial help spread across the world, especially Pakistan, 9/11 families, as well as aiding residents of his home country, Sri Lanka.
Mr. Rajaratnam’s lawyers are expected to appeal the Judge’s sentence, but any chance for an overturn are extremely lowHe will now have 45 days to get his affairs in order, to spend time with his family, and mentally prepare himself for the trials and tribulations ahead. He will report to the Bureau of Prisons, which will assign him to a correctional facility. Between now and then however Rajaratnam will be ensconsed at his deluxe apartment high atop Sutton Place. It’s a strong possibility that he will begin serving his time at the federal complex in Butner, N.C.. The very same complex where Bernard Madoff is.
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