A Connecticut hedge fund worker who made more than $11 million through illegal trades was sentenced Wednesday to 5 1/2 years in prison by a judge who complained that Wall Street wasn't hearing the message that insider trading is a crime that ruins careers and leads to time behind bars.
"There has to be a message sent to hedge fund managers, traders and lawyers that this is not going to be tolerated," U.S. District Judge Richard Sullivan said as he sentenced Craig Drimal for his role in what prosecutors described as the biggest hedge fund insider trading case in history.
Drimal, of Weston, Conn., was among more than two dozen hedge fund workers and corrupt employees of public companies convicted in a scheme prosecutors say reaped more than $50 million in profits and resulted in the convictions of more than two dozen people, including one-time billionaire Raj Rajaratnam, who awaits sentencing. Drimal pleaded guilty in April.
"I'm deeply sorry for the pain that I've caused," a choked-up Drimal said before he was sentenced. "I understand I committed a crime and I deserve to pay a price."
Drimal, who's in his mid-50s, sometimes shared office space at Rajaratnam's Manhattan-based Galleon Group of hedge funds, though he was not an employee. Drimal, the first securities trader to be wiretapped by federal authorities in the probe, was caught in a phase of the investigation that found several securities traders relying on tips from two corrupt lawyers at a Manhattan law firm who had information about pending mergers and acquisitions.
The judge said he was disappointed at the cavalier attitude displayed by participants in the securities fraud, including an arrogance that caused some of them to view insider trading as just another tool to gain an edge.
"I think he was confident he wasn't going to be caught," the judge said, rejecting requests by Drimal's lawyer for leniency because of his charitable works and his devotion to his family and friends.
The judge noted that Drimal played a key role in bribing lawyers to accept tens of thousands of dollars to supply tips that would reap millions of dollars for him and others.
"The folks who were paying them the bribes made millions," he said. "You made more than anybody."
During the sentencing hearing, the judge noted that Drimal spent $17,000 monthly and owned a 3,500-square-foot home while declaring no taxable income for several years, a fact his lawyer blamed on trading losses balancing out his gains.
"That's a neat trick," the judge said. "I've got to learn how to do that."