India-born trading trial witness deserves

Kumar,53,had pleaded guilty in 2010 to charges of securities fraud and insider trading.

Written by Agencies | New York | Published: July 17, 2012 12:30:28 pm

McKinsey’s former India-born partner Anil Kumar whose “extraordinary” cooperation helped convict Wall Street tycoons Raj Rajaratnam and Rajat Gupta in insider trading trials deserves leniency at his sentencing later this week,US prosecutors here have said.

Ahead of his expected sentencing on July 19 for securities fraud charges,Manhattan US Attorney Preet Bharara,in a 20-page letter to US Circuit Court Judge Denny Chin,said Kumar’s “cooperation was nothing short of extraordinary.”

His “absolutely essential” testimony “substantially helped the government secure convictions in two of the most significant and high-profile trials of defendants for securities fraud in history,Raj Rajaratnam and Rajat Gupta.”

Kumar,53,had pleaded guilty in 2010 to charges of securities fraud and insider trading. He was arrested along with Rajaratnam in October 2009.

He was a key government witness against his Wharton Business School batchmate Rajaratnam,55,and his mentor at McKinsey Gupta,63,during their insider trading trials.

He faces a maximum prison sentence of 20 years but could be given a lenient jail term due to his extensive cooperation with the government.

Assistant United States Attorneys Reed Brodsky and Richard Tarlowe recommended in the letter that the court sentences Kumar keeping in mind the cooperation he provided.

The prosecutors said during Rajaratnam’s trial,Kumar provided “devastating” testimony regarding his illegal tips to the Galleon hedge fund founder and the payments he received in return.

During Gupta’s trial,Kumar provided testimony regarding the former McKinsey head’s close relationship with Rajaratnam,Gupta’s and Rajaratnam’s involvement in launching a billion dollar private equity firm and Gupta’s statements to

Kumar regarding his relationship with Rajaratnam following the bankruptcy of Lehman in September 2008.

Rajaratnam is currently serving an 11-year prison term after he was convicted of insider trading charges last year.

Gupta was found guilty on four of the six counts of insider trading and securities fraud last month and will be sentenced in October.

Prosecutors said Kumar,who had fainted when the FBI informed him that he would be arrested,did not “hesitate” or “second-guess” and immediately decided to cooperate with the government in its insider-trading crackdown against Wall

Street big wigs.

“From the first day of Kumar cooperation through the present,he’s been one of the best and most important cooperating witnesses. In the context of the government

investigation and prosecution of Kumar’s immediate cooperation warrants special mention and recognition,” the prosecutors said.

They said due to Kumar’s cooperation the government became aware of his illegal tips to Rajaratnam in 2004 and 2005 and was able to garner additional evidence against Rajaratnam that helped convict the Sri Lankan billionaire.

Kumar then proved to be a “significant witness” at the criminal trial of Gupta,against whom he agreed to testify “despite the fact that Gupta was Kumar’s mentor for much of his career at McKinsey,” the prosecutors said adding that Kumar and Gupta’s family had also been close.

“Undoubtedly,given this personal relationship,although Kumar never said it,providing information helpful to the government during the criminal investigation of Gupta and during the criminal trial of Gupta must have been difficult

for him,” they said.

The letter added that few other people associated with the insider-trading investigation of Rajaratnam had agreed to cooperate with the government.

“In the world of Rajaratnam and his co-conspirators,cooperation was sadly viewed as a fundamental breach of trust to one another,and cooperators were viewed by many Galleon employees and other members of Rajaratnam’s criminal schemes as ‘ratting out’ a trusted friend.

Rajaratnam and his co-conspirators “apparently believed it was better to go to jail than breach their criminal partnership,” they added.

“Kumar’s significant,powerful,and timely coopration has provided substantial assistance to the Government in the investigation and prosecution of two of the

most high profile defendants convicted of illegal insider trading in history,” the prosecutors said.

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