Former Hedge Fund Tycoon Rajaratnam Receive The Stiffest Sentence For Insider-Trading: Exclusive Photos

Galleon Group LLC’s Raj Rajaratnam is sentenced to 11 years on Thursday for masterminding the biggest hedge-fund insider trading scheme in U.S. history, that stretched from Silicon Valley to Wall Street.

U.S. District Judge Richard Holwell in Manhattan presided over the jury trial in which Rajaratnam was convicted of 14 counts of securities fraud and conspiracy. It was the stiffest sentence ever given for trading in the stock market using confidential corporate information.

The longest insider-trading sentence before Galleon was 10 years, given to former Credit Suisse Group AG banker Hafiz Muhammad Zubair Naseem, who was convicted in 2008 of leading a $7.8 million scheme.

Sri Lankan born Rajaratnam's rapid flight to billionaire hedge fund chief was undone with the arrest of a former Atherton resident who became a federal informant.

The informant, Roomy Khan, had been caught faxing confidential information to Galleon in 1998 when she worked at Intel. She pleaded guilty in 2002. Caught again in 2007, Khan agreed to cooperate in an investigation of Galleon. 

Rajaratnam, 54, was at the center of a seven- year conspiracy to trade on inside information from corporate executives, bankers, consultants, traders and directors of public companies.

He is fined $10 million and was also ordered to forfeit $53.8 million in illegal profits by the U.S. District Judge Richard J. Holwell, his "crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated." Said Howell.

In court papers, the government urged Holwell to make an example of Rajaratnam, saying he "represents the worst of illegal insider trading." Prosecutors compared him to Enron Corp.'s Jeffrey Skilling and WorldCom Inc.'s Bernard Ebbers, convicted in what prosecutors called "the worst of accounting frauds," and Bernard Madoff, the man behind history's biggest Ponzi scheme.

Rajaratnam's lawyer has asked for leniency based on medical conditions he said would be life-threatening if he's sent to prison.

Also caught up in the case Danielle Chiesi, the former beauty queen turned stock trader sentenced to two-and-a-half years in jail for her role in the biggest insider-dealing case in decades. She pleaded guilty to three counts of conspiracy to commit securities fraud arising from an insider trading scheme.

Chiesi, 45, was the former confidante of hedge fund billionaire Raj Rajaratnam, founder of the Galleon hedge fund.

Alan Kaufman, her lawyer, argued that Chiesi, said she was the victim of a "toxic" sexual relationship with Mark Kurland, her former boss and lover at trader New Castle Partners.

Chiesi was the 10th person to be sentenced after an insider-dealing investigation that has secured 46 guilty pleas and convictions.

The investigation caught many prominent valley figures. Among them were Anil Kumar, of Saratoga, a McKinsey & Co. executive who gave Rajaratnam a tip about an Advanced Micro Devices acquisition; Rajiv Goel, of Los Altos, an Intel executive who furnished advance word on Intel's earnings and an acquisition of broadband company Clearwire; and Ali Harari, of San Jose, an Atheros Communications executive who was accused of divulging confidential information. Richard Choo-Beng Lee and Ali Far, who ran the short-lived Spherix hedge fund in San Jose. 

Galleon hedge fund founder Raj Rajaratnam arrives at Manhattan Federal Court in New York October 13, 2011. Rajaratnam is in federal court for sentencing after being found guilty of insider trading stemming from the the government's aggressive use of phone taps to prosecute Wall Street figures.

Galleon hedge fund founder Raj Rajaratnam departs Manhattan Federal Court after his sentencing in New York October 13, 2011. Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered on Thursday to serve 11 years in prison, one of the longest sentences ever in an insider-trading case but far less than prosecutors sought.

Galleon hedge fund founder Raj Rajaratnam (L) departs Manhattan Federal Court after his sentencing in New York October 13, 2011. Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered on Thursday to serve 11 years in prison, one of the longest sentences ever in an insider-trading case but far less than prosecutors sought.

Galleon hedge fund founder Raj Rajaratnam departs Manhattan Federal Court in New York October 13, 2011. Rajaratnam is in federal court for sentencing after being found guilty of insider trading stemming from the the government's aggressive use of phone taps to prosecute Wall Street figures.

Galleon hedge fund founder Raj Rajaratnam departs Manhattan Federal Court in New York May 11, 2011.

Danielle Chiesi (L) arrives at the Federal Courthouse for sentencing related to the Galleon hedge fund insider trading case in New York July 20, 2011. The former high-school beauty queen and hedge fund trader is expected to learn how many days -- or years -- she will in fact spend behind bars for insider trading.

Danielle Chiesi arrives at the Federal Courthouse for sentencing related to the Galleon hedge fund insider trading case in New York July 20, 2011.

Galleon Group hedge fund founder Raj Rajaratnam (2nd R) is seen during the reading of his guilty verdict in this courtroom sketch made in Manhattan Federal Court during his insider trading case in New York May 11, 2011. Rajaratnam was found guilty of 14 securities fraud and conspiracy charges, in a vindication for the government's use of aggressive tactics in prosecuting insider trading on Wall Street.

Galleon Group hedge fund founder Raj Rajaratnam (R) is seen during the reading of his guilty verdict in this courtroom sketch made in Manhattan Federal Court during his insider trading case in New York May 11, 2011. Rajaratnam was found guilty of 14 securities fraud and conspiracy charges on Wednesday, in a vindication for the government's use of aggressive tactics in prosecuting insider trading on Wall Street.

Galleon hedge fund founder Raj Rajaratnam (C) departs Manhattan Federal Court with his lawyers in New York May 11, 2011.

Lawyer John Dowd (L) speaks to the press with Galleon hedge fund founder Raj Rajaratnam (C) after Rajaratnam was found guilty, outside the Manhattan Federal Court in New York May 11, 2011. Galleon Group founder Raj Rajaratnam was found guilty on all 14 conspiracy and securities fraud charges on Wednesday, in a vindication of the government's aggressive tactics in prosecuting crime on Wall Street.

Galleon hedge fund founder Raj Rajaratnam departs Manhattan Federal Court after being found guilty, in New York