Today's sentencing of fallen Wall Street titan Rajat Gupta for insider
trading could come down to whether a judge agrees that his lifetime of
charity counts against sending him to prison.
The former Goldman Sachs Group Inc board member was convicted in June of
leaking boardroom secrets to hedge fund manager Raj Rajaratnam, his
friend and former business associate, at the height of the financial
Mr Gupta, 63, is to be sentenced by Manhattan U.S. District Judge Jed
Rakoff, who oversaw the four-week trial. The former Goldman director,
who also once ran the McKinsey & Co consulting firm and sat on the
boards of Procter & Gamble Co and American Airlines, is the most
influential corporate figure to be convicted in the recent crackdown on
The Indian-born had moved in elite business and philanthropic circles
for decades until he became ensnared in the Rajaratnam case.
Mr Gupta's lawyers have requested that he be spared prison, citing his
work with groups such as the Bill & Melinda Gates Foundation on
fighting disease in developing countries. Bill Gates, Microsoft Corp's
co-founder, and former United Nations Secretary-General Kofi Annan are
among the luminaries who have urged Judge Rakoff to be lenient.
As one alternative to prison, the defense proposed "a less orthodox"
plan in which Mr Gupta would live and work with Rwandan government
officials to help fight HIV/AIDS and malaria in rural districts, court
Federal prosecutors, however, argue that Mr Gupta should serve eight to
10 years in prison. Mr Gupta repeatedly flouted the law and abused his
position as a corporate board member, they said.
Legal experts say Judge Rakoff is unlikely to grant Mr Gupta's request
to avoid prison. The leaks of sensitive information at the heart of his
case involved serious breaches of trust, said JaneAnne Murray, a
white-collar defense attorney and professor at the University of
Minnesota Law School.
"Balanced against that will be the breadth of his philanthropy," she
said. "These extremes give this sentencing Shakespearean overtones."
Judge Rakoff is considered by many defense attorneys to be less harsh in
sentencing than some of his peers, but he has imposed significant
prison terms in other insider-trading cases.
In 2011, for example, Judge Rakoff sentenced technology consultant
Winifred Jiau to four years in prison on similar insider-trading
charges. Another judge sentenced Mr Rajaratnam, who was convicted of
securities fraud and conspiracy in May 2011, to 11 years.
Mr Gupta was found guilty of three counts of securities fraud and one
count of conspiracy. The maximum sentence is 20 years for securities
fraud and five years for conspiracy.
He was cleared of divulging P&G's quarterly earnings in January
2009. He was also found not guilty of illegally telling Mr Rajaratnam
about Goldman's quarterly earnings after a March 12, 2007, board
Part of the prosecution's evidence was that within a minute of
disconnecting from a September 2008 board call approving a $5 billion
investment in Goldman by Warren Buffett's Berkshire Hathaway Inc, Mr
Gupta called Mr Rajaratnam. Mr Rajaratnam then hurriedly ordered his
traders to buy as much as $40 million in Goldman stock, prosecutors
© Thomson Reuters 2012