Tuesday, 9 February 2016
Last updated 10 hours ago
Feb 10 2010 | 2:40pm ET
Galleon Group founder Raj Rajaratnam faces an additional 40 years in prison under a new insider-trading indictment filed against him today.
Federal prosecutors added two new securities fraud charges against Rajaratnam, who is accused of masterminding the largest insider-trading scam in U.S. history. The superseding indictment also strengthens several of the other 17 charges against the former hedge fund chief, increases the amount of ill-gotten gains he allegedly netted and lengthens the time frame of the scheme.
If convicted of all of the charges, Rajaratnam, who has pleaded not guilty, could face as much as 185 years in prison. Prosecutors are also demanding a total of $49 million in forfeitures from both Rajaratnam and his co-defendant, former New Castle Partners portfolio manager Danielle Chiesi. In the earlier indictment, prosecutors were seeking just $20.8 million.
Chiesi does not face any new counts in the indictment, but several of the 17 already leveled against her were amended with new allegations.
The new counts and allegations stem from two of the nine guilty pleas won by prosecutors in a case that has netted 21 people. Anil Kumar, formerly of McKinsey & Co., and Rajiv Goel, formerly of Intel, both admitted to passing confidential information to Rajaratnam. Kumar alleges that Rajaratnam paid him as much as $2 million for the tips.
“Mr. Rajaratnam is innocent and looks forward to his day in court when a jury of his fellow citizens will examine and evaluate all the evidence,” the Galleon founder’s lawyer, John Dowd, said in a statement.
Dowd wasn’t only putting out press releases. Yesterday, he told U.S. District Judge Richard Holwell that he’ll seek to exclude the wiretaps at the heart of the government’s case against his client. Also yesterday, another federal judge ordered Rajaratnam and Chiesi to turn over those wiretaps to the Securities and Exchange Commission for its civil case against them.
Rajaratnam’s lawyer went on to complain that his team have been able to sift through only 20% of the 15,000 wiretap intercepts, and will need another three months to finish their review.
Dowd also said he would seek to split Rajaratnam’s trial from Chiesi, who earlier this week called it “an honor and a privilege” to be his co-defendant.