Trial Test

30 September 2011 By Reynolds Holding

Uncle Sam rewards cooperation with milder sentences. But Galleon-related cases show that prosecutors’ targets are heavily penalized just for asserting basic trial rights. Judges should be wary of too big a difference – trials like Raj Rajaratnam’s bring needed clarity to the law.

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Raj Rajaratnam, chief of the Galleon Group hedge fund, is scheduled to be sentenced in U.S. district court on Oct. 13 for leading one of the largest insider-trading schemes in history. Convicted after a May trial on 14 counts of securities fraud and conspiracy, he may spend more than 24 years in prison if federal prosecutors get their way. They have argued that the $63 million Rajaratnam allegedly made illegally in the scheme and his lack of remorse help justify what would be the longest insider-trading sentence ever. A hearing on the amount of Rajaratnam’s gain is scheduled for Oct. 4.

On Sept. 21, U.S. District Judge Richard Sullivan sentenced Zvi Goffer to 10 years in prison after a jury convicted him of insider trading. Later the same day, Judge Jed Rakoff sentenced Winifred Jiau, also convicted of insider trading after trial, to four years in prison. Two other defendants in the Rajaratnam case, Danielle Chiesi and Mark Kurland, pleaded guilty earlier this year and received sentences of 30 months and 27 months, respectively.

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