Fund boss loses NY bid to stay free during appeal

AP News
Posted: Dec 01, 2011 5:35 PM
Fund boss loses NY bid to stay free during appeal

A hedge fund founder's long-shot bid to remain free pending appeals of his insider trading conviction and 11-year prison sentence was rejected Thursday by a federal appeals court.

The 2nd U.S. Circuit Court of Appeals in Manhattan denied the request of Raj Rajaratnam after hearing arguments a day earlier. Rajaratnam, a 54-year-old Sri Lanka native, was sentenced in October to the longest prison sentence ever to result from an insider trading case. He is scheduled to report to prison Monday. He had asked for leniency because of health problems.

The prosecution of the insider trading case resulted in convictions of more than two dozen people. Prosecutors say Rajaratnam, a one-time billionaire who founded the Galleon Group of hedge funds, made more than $70 million in illegal profits in trades between 2003 and 2009.

The appeals court issued its decision in a two-paragraph order. It said Rajaratnam should surrender at the time and place set by his trial judge.

Rajaratnam's appeals lawyer, Patricia Millett, had argued that Rajaratnam should remain free on $100 million bail pending appeal because the case raises substantial questions of law that could result in a new trial.

Millett said prosecutors failed to properly file requests for wiretaps that resulted in hundreds of hours of recorded phone calls between those charged in the case. Audio tapes provided key evidence used to prove Rajaratnam improperly traded the stocks of at least 19 public companies.

Millett declined to comment Thursday.

Assistant U.S. Attorney Jonathan Streeter had argued that the wiretaps were properly obtained and that a trial judge had already determined the information that was improperly excluded from the wiretap application would not have resulted in a denial of the wiretaps.