By Grant McCool
NEW YORK, May 21 (Reuters) - The first Wall Street executive to be sentenced in the sprawling Galleon hedge fund illegal insider trading case was ordered to serve two years and three months in prison on Friday.
Mark Kurland, once a senior managing director at New Castle Funds LLC in New York, was a supervisor of former trader Danielle Chiesi who, along with Galleon founder Raj Rajaratnam, is a principal defendant scheduled to go on trial in October.
'He chose to follow. He became a joiner, surrendering to the spree of the financial market's virtual mob mentality that nearly brought down this nation's economy in the quest for ever bigger and faster gains,' U.S. District Judge Victor Marrero told his crowded Manhattan courtroom.
Kurland's sentencing came four months after he pleaded guilty to conspiracy and securities fraud charges in what prosecutors describe as the biggest probe of illegal insider trading involving hedge funds in the United States. The government charged 21 traders, executives and lawyers last October and November.
The judge dismissed an attempt by the former hedge fund manager's lawyer, Patrick Smith, to minimize his client's role in overlapping insider trading schemes compared with an accused former International Business Machines Corp executive, Robert Moffat.
In a plea deal with Moffat, the government has agreed that his sentence should not exceed six months' imprisonment.
During the proceeding, U.S. prosecutor Reed Brodsky said that while the government believed Kurland was motivated by making money, Moffat and Chiesi had an 'intimate relationship.' Chiesi's lawyer, Alan Kaufman, declined to comment.
Moffat's lawyer, Kerry Lawrence, also declined to comment on the prosecutor's remark but he said he would seek probation for Moffat when he is sentenced on Sept. 13. Brodsky said the government would seek a six-month prison sentence for Moffat.
In January, Kurland admitted to participating in a scheme with Chiesi from mid-August 2008 through January 2009, a period of deepening crisis on Wall Street. The judge said Kurland's actions 'compromised the financial market's integrity at a time of financial crises and widespread concern about corruption, rampant recklessness, and arrogant greed at the highest levels of the industry.'
About 70 relatives, friends and investors packed the courtroom in support of Kurland, who slumped with his hands in his pockets as he stood listening to the judge impose the sentence of 27 months. He was ordered to report to prison on July 23.
Kurland, 61, told the court that his actions were 'not what I am about' and 'This is the saddest and most difficult day of my life.'
Kurland agreed to forfeit $900,000, the amount he was said to have earned in illegal profits, but chose not to cooperate with investigators -- unlike eight other defendants, some of them former friends of Rajaratnam or former Galleon employees.
Prosecutors accused Chiesi of obtaining inside information from Moffat, Rajaratnam and an executive at Akamai Technologies Inc on several publicly traded companies, including IBM, Sun Microsystems Inc, Advanced Micro Devices Inc and Akamai.
In turn, Chiesi shared the information with Kurland and they traded on it in the accounts of New Castle hedge fund.
In all, 11 of the 21 accused have pleaded guilty to criminal charges. Rajaratnam and Chiesi have pleaded not guilty and have asked a judge to suppress secretly recorded telephone conversations from the trial evidence.
The cases are USA v Kurland, U.S. District Court for the Southern District of New York, No. 10-00069 and USA v Rajaratnam et al No. 09-01184.
(Reporting by Grant McCool; Editing by Richard Chang, Matthew Lewis and Leslie Gevirtz) Keywords: GALLEON/KURLAND (grant.mccool@thomsonreuters.com; +1-212-393-9461; Reuters Messaging: grant.mccool.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, May 21 (Reuters) - The first Wall Street executive to be sentenced in the sprawling Galleon hedge fund illegal insider trading case was ordered to serve two years and three months in prison on Friday.
Mark Kurland, once a senior managing director at New Castle Funds LLC in New York, was a supervisor of former trader Danielle Chiesi who, along with Galleon founder Raj Rajaratnam, is a principal defendant scheduled to go on trial in October.
'He chose to follow. He became a joiner, surrendering to the spree of the financial market's virtual mob mentality that nearly brought down this nation's economy in the quest for ever bigger and faster gains,' U.S. District Judge Victor Marrero told his crowded Manhattan courtroom.
Kurland's sentencing came four months after he pleaded guilty to conspiracy and securities fraud charges in what prosecutors describe as the biggest probe of illegal insider trading involving hedge funds in the United States. The government charged 21 traders, executives and lawyers last October and November.
The judge dismissed an attempt by the former hedge fund manager's lawyer, Patrick Smith, to minimize his client's role in overlapping insider trading schemes compared with an accused former International Business Machines Corp executive, Robert Moffat.
In a plea deal with Moffat, the government has agreed that his sentence should not exceed six months' imprisonment.
During the proceeding, U.S. prosecutor Reed Brodsky said that while the government believed Kurland was motivated by making money, Moffat and Chiesi had an 'intimate relationship.' Chiesi's lawyer, Alan Kaufman, declined to comment.
Moffat's lawyer, Kerry Lawrence, also declined to comment on the prosecutor's remark but he said he would seek probation for Moffat when he is sentenced on Sept. 13. Brodsky said the government would seek a six-month prison sentence for Moffat.
In January, Kurland admitted to participating in a scheme with Chiesi from mid-August 2008 through January 2009, a period of deepening crisis on Wall Street. The judge said Kurland's actions 'compromised the financial market's integrity at a time of financial crises and widespread concern about corruption, rampant recklessness, and arrogant greed at the highest levels of the industry.'
About 70 relatives, friends and investors packed the courtroom in support of Kurland, who slumped with his hands in his pockets as he stood listening to the judge impose the sentence of 27 months. He was ordered to report to prison on July 23.
Kurland, 61, told the court that his actions were 'not what I am about' and 'This is the saddest and most difficult day of my life.'
Kurland agreed to forfeit $900,000, the amount he was said to have earned in illegal profits, but chose not to cooperate with investigators -- unlike eight other defendants, some of them former friends of Rajaratnam or former Galleon employees.
Prosecutors accused Chiesi of obtaining inside information from Moffat, Rajaratnam and an executive at Akamai Technologies Inc on several publicly traded companies, including IBM, Sun Microsystems Inc, Advanced Micro Devices Inc and Akamai.
In turn, Chiesi shared the information with Kurland and they traded on it in the accounts of New Castle hedge fund.
In all, 11 of the 21 accused have pleaded guilty to criminal charges. Rajaratnam and Chiesi have pleaded not guilty and have asked a judge to suppress secretly recorded telephone conversations from the trial evidence.
The cases are USA v Kurland, U.S. District Court for the Southern District of New York, No. 10-00069 and USA v Rajaratnam et al No. 09-01184.
(Reporting by Grant McCool; Editing by Richard Chang, Matthew Lewis and Leslie Gevirtz) Keywords: GALLEON/KURLAND (grant.mccool@thomsonreuters.com; +1-212-393-9461; Reuters Messaging: grant.mccool.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.