Rajat Gupta to Finish Insider-Trading Sentence at Home

During Rajat Gupta's heyday as a globe-trotting management consultant, one of the highlights of January was the World Economic Forum's annual gathering of global business titans in Davos, Switzerland.

As a three-time managing director of the consulting firm McKinsey & Co., Gupta was well acquainted with many of the world's most powerful corporate executives. The forum was an opportunity for Gupta, a Harvard Business School graduate, to join them in the rarefied setting of the Swiss Alps.

But this year, Gupta will be with his wife and four daughters at his apartment in Manhattan's Century building, an Art Deco edifice on Central Park West that has served for years as his pied-a-terre.

On Jan. 5, Gupta was released from Federal Medical Center Devens, a federal correctional facility in Ayer, Massachusetts, 40 miles northwest of Boston, to serve out the rest of a prison sentence at home.

A year and a half ago, Gupta began a two-year sentence for securities fraud. In June 2012, a Manhattan jury found Gupta guilty of tipping Raj Rajaratnam, a onetime business associate and founder of a New York hedge fund known as the Galleon Group, to corporate secrets that Gupta had gleaned in his position as a director of companies like Goldman Sachs and Procter & Gamble.

Even though Gupta is no longer at Devens, he will remain a federal inmate until March 13, confined to his apartment and required to wear an ankle bracelet that monitors his movements.

Gupta applied last year to corrections officers for an early discharge from Devens. Under the Second Chance Act, the Bureau of Prisons is authorized to send an inmate to what is called community confinement for re-entry purposes - as long as the individual poses no threat, said Joel Sickler, the founder of the Justice Advocacy Group, a company that advises inmates on prison stays. Inmates often need help finding a job or securing housing after a stint in prison.

"If you have need for re-entry services, you go to a halfway house, but absent that need, you go to home confinement," said Sickler, adding: "The average white-collar guy doesn't go to a halfway house."

An inmate in good standing is eligible for home confinement for 10 percent of a sentence, up to six months, said Sickler. Many white-collar inmates like Gupta argue for an early release so they can go back to work and pay off the mounting financial obligations they face in the form of fines and restitution.

Under the rules governing home confinement, Gupta can go to work, visit a doctor's office or attend religious services, Sickler said. "With permission, you can go shopping or get a haircut," he added.

But neighbors should not expect to see Gupta at some of the Upper West Side venues he liked to frequent - restaurants like Pappardella.

"They don't let you do anything socially related - go to dinner, go to the movies," Sickler said.

When Gupta was assigned to Devens, he was sent to the facility's minimum-security camp, which houses 124 inmates. The camp is separate from the main prison, where Rajaratnam is serving an 11-year sentence for insider trading. Inmates in the camp do not come in contact with prisoners in the main compound.

But last summer, Gupta, 67, was transferred to the main compound, which houses 1,046 inmates and offers medical facilities. In April 2015, he was sent to the prison's Special Housing Unit for having an unauthorized item: an extra pillow. Gupta had grabbed the extra pillow, as many inmates do, to help ease a bad back.

"Rajat ended up finding the medical center more to his liking than the camp," Sickler said. "They didn't nitpick so much."

He was also afforded a greater degree of privacy in the main compound, where inmates are housed in cells, rather than in open barracks.

Gupta, who traveled tirelessly for business and was a prodigious networker during his career, appears to be eager to get back to the world he once inhabited. He is already working out of the offices of Purnendu C. Chatterjee, an old friend from McKinsey who amassed a fortune by investing in public and private companies after leaving the firm.

Chatterjee was one of Gupta's most passionate defenders when he was convicted of insider trading, going so far as to doubt the basis for the verdict against his friend and writing a letter to the court on Gupta's behalf before his sentencing.

Gupta has enormous financial losses to recoup. Just a decade ago, his net worth was more than $130 million. In sentencing Gupta in October 2012, Judge Jed S. Rakoff of U.S. District Court in Manhattan fined him $5 million and, in 2013, the Securities and Exchange Commission secured a $13.9 million penalty against Gupta. He was also ordered to reimburse Goldman Sachs $6.2 million for an internal investigation of the case against him and other legal expenses. Gupta's appeals of the financial sanctions were rejected.

Gupta may also be forced to pay Goldman for his legal defense, which has cost more than $40 million. Under a deal reached before trial, Gupta agreed that if he were found guilty of insider trading, he would reimburse the investment bank for his legal fees.

Even before reporting to Devens, Gupta started to put his financial house in order. He began paying regular visits to his villa in the Palm Island Resort in southwest Florida, making it his legal residence. Unlike in Connecticut, where Gupta owns a waterfront property that once belonged to retail magnate James Cash Penney Jr., domicile in Florida will allow Gupta to shield his home, regardless of its value, from any bankruptcy court proceeding.

Since returning to his Manhattan apartment, Gupta has been fielding calls from former associates who say he is in good spirits and looks back on his spell in prison philosophically.

Though Gupta has not had an easy time in prison, he will get one break. His March 13 release date falls on a Sunday, so "they will release him on Friday," said Sickler. "He will turn his bracelet in that Friday afternoon."

© 2016 New York Times News Service