India-born former Goldman Sachs Director Rajat Gupta will on Tuesday report to a prison in Massachusetts to begin his two-year sentence for insider trading, after having fought an over three-year long legal battle with all his might to clear his name.
65-year-old Gupta, once regarded as among the most powerful and influential in corporate America, will serve his jail term at a minimum security satellite camp of the Federal Medical Center-Devens in Ayer, Massachusetts. Incidentally Gupta’s camp, which currently has 132 inmates, is next to the medical centre where his one-time friend and business associate hedge fund founder Raj Rajaratnam is serving his 11-year prison sentence for running a massive insider trading scheme. Gupta was convicted in 2012 after a jury trial of passing
confidential information about Goldman Sachs to Rajaratnam minutes after he learned about them at the board meetings.
The IIT-Delhi and Harvard alumnus is expected to arriveat the prison facility before noon after which he will undergo routine medical tests, an information officer at the prison said over phone. The medical tests will take a day to be completed, following which Gupta will be lodged in the satellite camp.
According to initial information available on thefacility’s website, Gupta has been described as a 65-year-old “Asian, male.” According to the camp’s rules, Gupta will be able to receive family and friends on Saturdays, Sundays and federal holidays between 8:30 AM to 3:00 PM while on Fridays between 2:30pm and 8:30pm.
Normally, only five visitors, including children, are allowed to visit an inmate at any given time. A report last week in the New York Times had quotedretired Bureau of Prison’s Correctional Treatment Specialist Jack Donson as saying that Gupta could serve approximately 85 per cent of his two-year sentence before becoming eligible for transfer to a halfway house prior to his release date. Although the statutory maximum halfway house is 12 months, white collar offenders with family and financial resources can expect a minimal amount of halfway house placement or direct home detention.
“Based on that, Gupta could be back home by the end of2015. When Gupta reports to Devens, he will have fought his conviction and efforts to stay out of prison for a longer period of time than he will even be in prison” Donson said. Eminent journalist Anita Raghavan authored a book on the collapse of Rajaratnam’s Galleon hedge fund and the unraveling of Wall Street big-wigs as the government, led by Mannattan’s India-born top federal prosecutor Preet Bharara, uncovered one of the biggest insider trading schemes in US history.
In ‘The Billionaire’s Apprentice: The Rise of the Indian- American Elite and the Fall of the Galleon Hedge Fund,’ Raghavan writes that Gupta would “still be remembered as the dignified McKinsey managing director who fell down the money trap and under the spell of a boorish hedge-fund trader, a reality which, in his world, is almost as damning as the crime he stands accused of committing.
“At one point Gupta was convinced he would find a way to come back, salvage his tattered reputation and perhaps even rebuild his savings, which have taken a beating as his legal troubles have mounted. He thought he might be able to rehabilitate his brand…(but) Gupta had a reputation that was completely wrapped up in his.” Raghavan writes that even if Gupta could have succeeded in overturning the conviction, his “options at rehabilitation are limited” since the US Securities and Exchange Commission is seeking in a parallel civil case to bar him from running a company and even working for an investment adviser.
“In a way, it is one of the few realities of his new life that he has embraced,” Raghavan writes and quotes a friend of Gupta as saying that, “I don’t think Rajat aspires to be in the same room as (JP Morgan Chase CEO) Jamie Dimon anymore. I don’t think he really cares.” The prison term is the final nail in the coffin for Gupta, who rose to stellar heights in corporate America and became the poster-boy of the Indian-American success story.
At age 45, he became the first Indian CEO of the consulting giant McKinsey. He co-founded the prestigious Indian School of Business with fellow McKinsey executive Anil Kumar, who had pleaded guilty to insider trading and testified as a government witness against Gupta in his trial.
Gupta was also involved with various philanthropic causes, a side that the defence tried to portray at the trial using character witnesses.
Nearly 200 supporters, including influential names like Reliance Industries Chairman Mukesh Ambani, Microsoft co-founder Bill Gates and former UN Secretary-General Kofi Annan, wrote letters to the trial judge asking him to show leniency when he sentenced Gupta for insider trading.
He had been fighting with all his might to reverse his insider trading conviction and avoid going to jail. His trial lawyer was renowned defense attorney Gary Naftalis and his appeal is being fought by former United States solicitor general Seth Waxman. The lengthy legal battle is bound to cost millions of dollars for Gupta, who once had a networth of USD 130 million. The NYT report had said that his total legal costs, including fees paid to his trial lawyers, consultants and experts, stands at roughly USD 40 million. Gupta was initially required to report to prison inJanuary 2013, a few months after his conviction. He has been free on bail pending appeal since then but the Second Circuit Court of Appeals affirmed his convictions in March this year.