Ex-IBM Exec. Blames Affair For Galleon Case Involvement

Aug 19 2010 | 1:07pm ET

Lawyers for former IBM executive Robert Moffat appealed to a federal judge for mercy for his role in the Galleon Group insider-trading scandal, saying he was blinded by love, or something like that.

Former New Castle Partners executive Danielle Chiesi “played” Moffat for information during their affair, Moffat’s lawyers said. Moffat, who was a top executive at IBM and a possible candidate to take over as CEO, should be sentenced to probation, they urged U.S. District Judge Deborah Batts.

Prosecutors are seeking six months in prison—the maximum under Moffat’s plea agreement. The government doesn’t deny that Moffat’s “intimate, personal relationship” with Chiesi was the reason he provided the information, but argued earlier this week that he knew “full well” she planned to trade on the non-public information. Moffat himself is not accused of trading on insider-information.

But Moffat was not a wholly willing participant in Chiesi’s alleged misdeeds, his lawyers claim.

“To the contrary, she manipulated or ‘played’ him to obtain information that she could use” on three companies, Moffat’s side avers. Moffat himself, in a letter to the court, said he merely wanted to “appear important and knowledgeable to show Ms. Chiesi that I was ‘in the know’ about important matters.”

Chiesi and her co-defendant, Galleon founder Raj Rajaratnam, have pleaded not guilty and are set to go on trial in January.


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