A federal appeals court appears disinclined to set former hedge fund manager and convicted insider-trader Zvi Goffer free.
Lawyers for the former Galleon Group trader and Incremental Capital founder asked the U.S. Second Circuit Court of Appeals to throw out both Goffer's 10-year prison sentence, one of the longest in history for insider-trading, and, despite his claim to have accepted responsibility for his crimes after he was found guilty, his conviction on conspiracy and securities fraud charges. But if the three-judge panel's skeptical questions yesterday are any guide, Goffer is unlikely to see either happen.
"He's 34 years old, the age of my children," U.S. Circuit Judge Richard Wesley pointed out. "One would think he would know better."
Goffer's lawyer argued that the sentence imposed by U.S. District Judge Richard Sullivan in 2011 was unfair, more of a punishment for Goffer's refusal to plead guilty than for his crimes. Alexander Dudelson noted during yesterday's hearing that Goffer's sentence was longer than other convicted insider-traders, whose crimes he said were worse.
The Second Circuit's chief judge, John Walker, suggested that Goffer's relative youth compared to the likes of his former boss, Raj Rajaratnam, and Rajaratnam tipster Rajat Gupta, may have merited the longer sentence.
"A significant sentence at 60 years old has a different impact on that person than a younger man," Walker said.
The court also heard the appeal of Michael Kimelman, who was convicted alongside Goffer and Goffer's brother, Emanuel, in 2011 and sentenced to two-and-a-half years in prison. Kimelman had rejected a no-jail deal with prosecutors before the trial.
Kimelman's lawyer pointed out that the wiretaps at the center of the case against Goffer do not show that his client knew about an insider tip when he bought shares of 3Com Corp. in 2007, before the government began recording Goffer's calls. Prosecutors retorted that Kimelman has a law degree and never challenged Goffer on merger documents that he should have know were confidential.