Raj Rajaratnam could face huge criminal fines and penalties as part of his insider trading conviction, but the hedge fund founder could remain a rich man even if he is sent to prison for a long time.
As recently as 2009, Forbes magazine said the Galleon Group founder was worth $1.3 billion, tied for 559th in the world. He fell off the list in 2010.
But the 53-year-old married father of three was still wealthy enough to fund a legal defence that lawyers not involved in the case have estimated cost many millions of dollars. Indeed, a single defence witness, a finance professor at the University of Rochester who studied Rajaratnam?s trades, was paid $200,000, according to trial testimony.
A Manhattan federal jury on Wednesday convicted Rajaratnam of 14 counts of securities fraud and conspiracy, in the biggest Wall Street insider trading case since a 1980s scandal involving financier Michael Milken and speculator Ivan Boesky. An appeal is planned, Rajaratnam?s lawyer said.
Rajaratnam is subject to a potential $172.6 million criminal penalty, based on twice his $63.8 million of gains on stocks such as Goldman Sachs and Google, and a $5 million fine on each of the nine securities fraud counts. He also faces a possible US Securities and Exchange Commission civil fine in a case that remains open. It is unclear how much money the Sri Lankan-born Rajaratnam still has. But lawyers outside the case said sums not held aside for government litigation would go to his family, with whom he could communicate periodically if he is in prison.
?You?re not able to run a business from prison, but you can control your personal financial affairs,? said Ronald Nessim, a lawyer in Los Angeles and former co-executive director of the American Bar Association?s White Collar Crime Committee. ?I?ve never heard of anyone telling a prisoner he can?t control his own assets, or appointing a receiver for assets beyond what?s necessary to satisfy a judgment,? he added.
Rajaratnam could face a 15-1/2 to 19-1/2-year prison term under federal sentencing guidelines, prosecutors said. Lawyers said he must serve at least 85% of any prison term he gets.