New York: A former Goldman Sachs and Procter & Gamble Co. board member convicted of insider trading will serve up to 10 years in prison if the government has its way but will face no more than community service if a judge is persuaded by defense arguments.
Rajat Gupta awaits his fate Wednesday for his role in a mammoth insider trading case that prosecutors say was the largest in history. Already, former billionaire hedge fund owner Raj Rajaratnam — a onetime close friend of Gupta originally from Sri Lanka — is serving 11 years in prison for earning up to $75 million illegally. Gupta is among 25 people convicted in the insider trading case that has relied heavily on wiretaps and cooperation from many of the accused.
Prosecutors say Gupta belongs behind bars too while defense lawyers say it would be a disservice to humanity to send him to prison when he could be helping the world.
They cite in a pre-sentencing brief his many good works and the Rwandan government's support for a program in which Gupta would work with rural districts to battle HIV, malaria, extreme poverty and to help provide food security. The lawyers say the Rwandan government would join with a U.S.-based organization already working in the country to ensure effective supervision of Gupta's service.
They also say prison would spoil the efforts by Gupta, who was born in Kolkata, India, to develop new initiatives, including the Urban Institute of India, meant to bring the private sector, academia and the Indian government together to address accelerating migration to India's cities. The more than 400 letters written to the judge on Gupta's behalf included documents signed by Microsoft co-founder Bill Gates and former United Nations Secretary-General Kofi Annan.
"The conduct for which he was convicted represents an isolated aberration and a stark departure from this personal history," the lawyers wrote.
The government says a prison term between eight years and 10 years would reflect the seriousness of the crimes and deter others.
Prosecutors said Gupta showed "above-the-law arrogance" in feeding Rajaratnam inside tips between March 2007 and January 2009, sometimes within seconds of learning the information, and Rajaratnam used the tips to make more than $11 million in illegal profits for him and his investors.
"Gupta's crimes are shocking," the government wrote. "Gupta's crimes are extraordinarily serious and damaging to the capital markets. ... It understandably fuels cynicism among the investing public that Wall Street is rigged and that Wall Street professionals unfairly exploit privileged access to information. This is particularly troubling at a time when there is widespread concern about corruption, greed and recklessness at the highest levels of the financial services industry."