Last week, the prosecution and the defense filed their sentencing memoranda in the Rajaratnam case. Raj was convicted of 14 counts in all — 9 counts of securities fraud, and 5 conspiracy counts. So what do the parties think that’s worth? The feds asked Judge Holwell to sentence Raj in the range of 19.5 to 24.5 years. The defense didn’t make a specific request, just said it ought to be “well below” what the feds want.
So 20 years, huh? Wow, he must have been an awful bad guy. Must have hurt a whole lot of people, right?
After all, a mugger in a dark alley only takes one person’s wallet. A “white-collar criminal” can steal from thousands of people — and takes not just their wallet, but their life savings! Right?
Well, hang on. Did Raj actually steal from anyone? How many investors did he really harm? And did any of them really lose enough money to warrant locking someone up till we all have flying cars and jetpacks?
Judging from the feds’ sentencing memo, you bet. Just look at this, from the introduction:
Raj Rajaratnam’s criminal conduct was brazen, arrogant, harmful, and pervasive. He corrupted old friends. He corrupted subordinates. He corrupted entire markets. Day after day, month after month, year after year, Rajaratnam operated as a billion-dollar force of deception and corruption on Wall Street.
Wow, that sounds awful. So the victims are… who again?
But wait, there’s more:
Rajaratnam repeatedly leveraged the power of money and his position as the head of a 7-billion dollar hedge fund to induce friends, employees, and associates to participate in his criminal activities. Although already rich, Rajaratnam did this to drive up his personal wealth through profitable trading in his hedge fund. He did it to make sure that investors did not pull their money out of Galleon and to attract new money to his fund. And he did it because of his egomaniacal drive to triumph over his competitors on Wall Street.
Again, wow. (The feds sure like their adjectives, don’t they? Comes off a tad over-the-top, if not insulting to the intelligence.) So he was trying to increase his wealth, gotcha. But at whose expense? Guess we have to read more:
That was what he cared about: money and success. What he did not care about, at all, was the extensive harm he left in his wake: harm to the capital markets; harm to the average, ordinary investors who played by the rules; harm to the companies whose secret information was misappropriated; and harm to the lives of those he corrupted.
Well, that sounds a little more like it… but again, who was harmed, and how?
Although particular investors on the other side of Rajaratnam’s illegal trades are not easily identifiable, there should be no question that ordinary investors paid the price for Rajaratnam’s crimes and that public companies were harmed by Rajaratnam’s repeated theft of corporate secrets.
Oh for crying out loud. Are they joking? Stripped of its demagogical rhetoric, this translates to “We have not identified any actual victims. But we shouldn’t have to. It’s obvious that lots of people must have been harmed, even if we don’t know who they were.”
If they don’t know who — or even whether — anyone was actually harmed here, how in blazes do the feds justify asking for 19.5 to 24.5 years of imprisonment? Here’s how:
[The feds want that much time because they feel it is] proportionate to the historic nature of his crimes. He is arguably the most egregious violator of the laws against insider trading ever to be caught. He is the modern face of illegal insider trading.
That’s it. That’s all. “Because this is the first time we’ve ever caught someone so red-handed,” and “because this case got so much press.” Those are the sole reasons why they are looking to put this guy away until he dies of old age.
For the record, we’re predicting (more…)