Khan, Key Cooperator In Insider Probe, Gets Year In Prison

Feb 1 2013 | 12:13pm ET

A key—if not always reliable—figure in the federal insider-trading crackdown has been sentenced to one year in prison.

Unlike many cooperators, who avoided jailtime, former Intel Corp. executive and Galleon Group employee Roomy Khan will spend time behind bars. Unlike the other individuals who have helped prosecutors net some 70 convictions, Khan was caught in a series of lies to the Federal Bureau of Investigation. Another cooperator, former Barai Capital analyst Jason Pflaum, was also sentenced yesterday; he received probation.

"You cannot have it both ways," U.S. District Judge Jed Rakoff told the teary Khan, whose lawyer said she would not appeal the sentence. "You cannot obstruct justice and then say, 'Well, because I've done good things since, forget about it."

It is Khan's second insider-trading conviction. Prosecutors said she not only lied, both to the FBI and oath, but also destroyed evidence and tipped co-conspirators off to the Securities and Exchange Commission probe.

"I've lost all my money, and my education is rendered useless," Khan said. "I have been ostracized by most of my family and friends, and I lead my life as a pariah in isolation."

Khan admitted to passing confidential information to Galleon chief Raj Rajaratnam, who was convicted of insider-trading without her taking the stand. She did testify at the trial of Whitman Capital founder Doug Whitman; he was also convicted.

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