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HomeWorldGalleon's Rajaratnam, convicted for insider-trading, released from prison 3 years early

Galleon’s Rajaratnam, convicted for insider-trading, released from prison 3 years early

Raj Rajaratnam's Galleon Group once managed more than $7 billion and was among the world’s 10 biggest hedge funds in the early 2000s.

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Manhattan: Raj Rajaratnam, the mastermind of what prosecutors said was one of the largest hedge-fund insider-trading rings in U.S. history, is out of prison — almost two years early.

Rajaratnam, whose Galleon Group LLC once managed more than $7 billion, is back with his family on a quiet block of Manhattan’s East Side, where he’s mostly confined to his apartment for the remainder of his sentence. He’s free to work outside his home during the day.

Sentenced to 11 years behind bars after his 2011 conviction, he served his time at the Federal Medical Center Devens, a prison outside Boston. Rajaratnam, 62, is a beneficiary of the 2018 First Step Act, which allows some federal inmates who are over 60 years old, or who face terminal illnesses, to serve the end of their sentences at home.

The native of Sri Lanka applied for home detention and was released this summer, according to a person familiar with the matter who asked not to be named. Rajaratnam reported to Devens in December 2011, becoming inmate number 62785-054.

Rajaratnam became a billionaire after co-founding Galleon and was perhaps the highest-profile figure ensnared in a years-long crackdown on insider trading at hedge funds. Arrested in an early-morning FBI raid in October 2009, he was in the first wave of defendants charged by federal prosecutors in New York, with dozens of other traders, executives and company insiders accused in the years that followed.

The move from prison wasn’t announced by the U.S. Bureau of Prisons or by Rajaratnam’s legal team, and only became apparent after his location on the bureau’s public website was changed from Devens to “New York RRM,” an administrative unit that oversees inmates in halfway houses and on home detention.

Rajaratnam was due to be released on July 4, 2021, according to the BOP website. More than 240 applications for home confinement for “elderly offenders” have been granted under the First Step Act, according to the bureau. Rajaratnam isn’t required to wear an electronic-monitoring device to keep tabs on his location.

After 12 days of deliberations, a jury in New York found Rajaratnam guilty of 14 counts stemming from a seven-year plot to trade on inside information from corporate executives, bankers, consultants, traders and other insiders. Among his tipsters was Rajat Gupta, then a board member at Goldman Sachs Group Inc., who later went to prison for leaking secrets to Rajaratnam. Prosecutors said Rajaratnam earned more than $72 million from the illicit tips.

Rajaratnam was defended by John Dowd, a Washington lawyer who went on to represent President Donald Trump during part of Special Counsel Robert Mueller’s inquiry into Russian meddling in the 2016 election.

Galleon was among the world’s 10 biggest hedge funds in the early 2000s. Rajaratnam’s net worth of $1.3 billion made him the 559th richest person in the world, Forbes Magazine said in 2009.

The prosecution was one of the first insider-trading cases built on wiretapped telephone conversations, a tactic that until then was associated with organized-crime investigations. Jurors heard more than 40 recordings of Rajaratnam, in some of which he could be heard gathering secrets from his sources.

At Devens, Rajaratnam was one of 1,055 inmates in a facility surrounded by razor-wire fencing, with a perimeter patrolled by armed officers.

The prison’s focus is on men who need specialized or long-term medical or mental health care, according to the BOP. In court papers filed before he was sentenced, Rajaratnam said he had health problems including diabetes. – Bloomberg

Also read: Rajat Gupta fails to get his insider-trading conviction overturned


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