A federal jury in Manhattan convicted Rajaratnam on May 11 of all 14 counts of securities fraud and conspiracy against him. During the two-month trial, the panel heard evidence that he engaged in a seven-year conspiracy to trade on inside information from corporate executives, bankers, consultants, traders and directors of public companies.
"Raj Rajaratnam is no different from a host of others who falsely attributed impressive investment results to superior research and acumen," said Janice Fedarcyk, head of the New York office of the Federal Bureau of Investigation. "His considerable fortune was built on a clandestine network of corruption and concealment. Raj Rajaratnam did not merely bend the rules; he broke the law."
Prosecutors asked for a prison term ranging from 19 years and seven months to 24 1/2 years, citing federal sentencing guidelines and the 'historic nature of his crimes."
The U.S. compared Rajaratnam to Enron Corp.'s Jeffrey Skilling, who helped bring down the massive energy trader, and WorldCom Inc.'s Bernard Ebbers, convicted in what prosecutors called "the worst of accounting frauds."
Skilling was sentenced to 24 years in prison on charges that included fraud and insider trading, and Ebbers got 25 years. The Galleon Group hedge fund manager was also put in the same category as Madoff, whose massive scam they said represented "the worst of Ponzi schemes."
Rajaratnam's lawyers had asked for a sentence below the term sought by the government, one that was "fair, dispassionate and proportionate." They said the federal guideline range overstated the seriousness of Rajaratnam's crimes, and called the term sought by the U.S. "grotesquely severe."
Claiming Rajaratnam's actions made him only $7.4 million, they asked for 6 1/2 to 8 years, according to a person familiar with the defense case who declined to be identified because the matter isn't public.
There is no parole under the federal prison system.
Rajaratnam claimed a flawed loss calculation was responsible for most of the government's requested prison sentence. Federal sentencing guidelines, which are advisory, increase the recommended term for financial crimes based on the amount of money lost. Holwell held a hearing Oct. 4 to determine the loss resulting from Rajaratnam's crimes.
"This court's role is not to validate a prosecutorial public relations effort, nor is it to single out one man to serve as the whipping boy for Wall Street misdeeds," Rajaratnam's lawyers argued in court papers.