Intel Corp’s former India-born managing director Rajiv Goel deserves leniency as he provided ‘substantial assistance’ as a key government witness in Raj Rajaratnam’s insider trading trial that helped convict the hedge fund founder,Manhattan Attorney Preet Bharara has said.
Goel,54,was arrested with Rajaratnam in October 2009 and had pleaded guilty in 2010 to conspiracy and securities fraud. He faces up to 25 years in prison when he is sentenced on September 12 by US District Judge Barbara Jones.
Recommending a lenient sentence for Goel,Bharara said in a letter to Jones that Goel,”a highly significant witness substantially helped the government secure a conviction in one of the most significant and high-profile insider trading trials in history.”
Mumbai-born Goel had met Rajaratnam in 1983 at the Wharton Business School where he was studying business administration and the two grew close over the years.
Goel had served as managing director in Intel’s treasury department and had provided confidential information to Rajaratnam about the company,including its earnings and a billion dollar transaction in 2008.
Rajaratnam made over two million dollars in illegal profits based on the tips.
Goel had told prosecutors he repeatedly sought financial assistance from Rajaratnam,who loaned him USD 100,000 to buy a home in 2005 and another USD 500,000 the next year for his ailing father.
The prosecutors said despite Goel’s “long-standing,close friendship” with Rajaratnam and his family,he never hesitated to provide complete information to the government about his illegal tips to Rajaratnam.
The prosecutors said that from the first day of Goel’s cooperation through the present,he has been a very important,straightforward and extraordinarily helpful cooperating witness.
“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 and thus a lowly,feeble,and pathetic action to take.
“This negative view of cooperation made the Government’s investigation into insider trading schemes at Galleon all the more difficult,” the prosecutors said.
Goel is one of three main government witnesses who pleaded guilty to passing secret company information to Rajaratnam and have testified against him in the crucial insider trading case against the Sri Lankan billionaire.
The other government witness India-born former McKinsey executive Anil Kumar was spared jail time and was sentenced in July to only two years’ probation for his cooperation in Rajaratnam’s and his mentor at Mckinsey Rajat Gupta’s trial.
While Rajaratnam is currently serving 11 years in prison,Gupta will be sentenced next month.
An appeals court will hear Rajaratnam’s appeal against his conviction on October 25.
Goel’s lawyer David Zornow also wrote a letter to Jones saying his client should be spared prison term and sentenced only to probation as Goel does not have any previous criminal history and “had lived a life free of crime until he started providing Rajaratnam with inside information.”
“He knew that it was wrong for him to do so and regrets the decision that he made at the time,not only because of the negative consequences that he has justifiably suffered as a result of that decision,but also because of his betrayal of Intel,a company that had vested so much trust in him over the years,” Zornow said.
Goel has already paid a hefty price for his involvement with Rajaratnam,in terms of his career prospects and his personal finances,not to mention the toll that the case has exacted on his family,” said Zornow.
“Any sentence of incarceration would delay Goel’s efforts to rebuild his career,and would limit his ability to support those people who depend on him.”
Zornow said Goel has been unable to find a job since he was arrested in 2009 on insider trading charges.
Goel is also willing to pay more than USD 254,000 to the US Securities and Exchange Commission to settle a civil suit.
The government’s letter said that Goel has continued to help the government in its wide crackdown on insider trading at Wall Street.
Goel spoke with prosecutors as recently as July this year to provide certain information in the Galleon case that continues to be investigated.