A federal judge on Wednesday ditched his plans to send a cooperator in a historic insider trading case to prison, instead directing that he speak to college students about the perils of cheating on Wall Street as he carries out community service.
U.S. District Judge Sidney H. Stein also ordered Steven Fortuna, of Westwood, Mass., to serve six months of home confinement for his role in what prosecutors once called the biggest insider trading case in history. Fortuna also must forfeit $200,000.
The judge ordered Fortuna to carry out 120 hours of community service for each of two years, recommending that some of the time be spent speaking to students at business schools and colleges, including his alma maters, Columbia Business School and Boston University. He said the students would benefit from hearing about "his own situation, how easy it is for him and others to commit this crime and the difficulty he's encountered as a result."
In October 2009, Fortuna pleaded guilty to three counts of conspiracy to commit securities fraud and one count of securities fraud, admitting that he benefited from insider information disclosed by employees of technology companies from July 2008 through March 2009.
The judge said he believed Fortuna deserved a prison sentenced until a prosecutor "stood up and went to bat for you."
Assistant U.S. Attorney Antonia Apps said Fortuna's immediate cooperation and agreement to engage in hundreds of consensually recorded calls and meetings with friends and colleagues played a crucial role in the convictions of hedge fund consultant Danielle Chiesi and former IBM executive Robert Moffat. More than two dozen people were convicted as part of a probe that made extensive use of wiretaps for the first time in a white-collar investigation.
Chiesi, who blamed her boss for coercing her into insider trading during a 20-year affair, is serving a 2 1/2-year sentence. Moffat, who said his feelings for Chiesi clouded his judgment, was sentenced to six months.
Also convicted was Raj Rajaratnam, a former billionaire hedge fund founder from Sri Lanka who is serving an 11-year prison sentence but has appealed. Prosecutors say he earned as much as $75 million illegally through inside trades.
Before Fortuna's sentence was announced, he apologized, saying he was "deeply sorry for my very poor judgment."
"Everything I worked so hard for has been completely destroyed," he said.
Fortuna said he has tried to rebuild his life by starting a business to develop products in the beverage industry.