Disgraced star Wall Street hedge fund manager Raj Rajaratnam was sentenced Thursday to 11 years behind bars in the heaviest US sentence for insider trading, although far below what prosecutors had sought.
New York federal Judge Richard Holwell also ordered the Sri Lankan-born founder of the Galleon Group hedge fund to pay a fine of $10 million and restitution of $53.8 million.
But he said Rajaratnam's poor health was the reason for refusing the prosecution's request that the former trader be sentenced to as much as 24 years in prison.
Holwell revealed for the first time publicly that Rajaratnam, 54, is suffering from "advanced diabetes leading to imminent kidney failure."
The judge added he was taking into account the fallen Wall Street trader's philanthropy, saying Rajaratnam's "response to and care for the less privileged go considerably beyond the norm."
The judge also insisted that while "insider trading is insidious" it "poses a different danger to Enron-like fraud" or the kind of pyramid scheme run by Wall Street conman Bernard Madoff, robbing thousands of people of their savings.
Rajaratnam will remain free until November 28, when he must surrender himself.
The convicted man, wearing a dark business suit, declined an opportunity to address the judge before his sentencing.
A chaotic scene then broke out as the fallen tycoon, seen before his arrest as one of Wall Street's brightest investors, left the federal courthouse with his lawyer and a bodyguard, pushing their way through a mob of photographers and camera crews.
One photographer fell over backwards on the sidewalk and scuffles broke out before Rajaratnam squeezed into a waiting black SUV.
The Department of Justice, which sought to make an example of Rajaratnam, said in a statement that he had been given the "longest prison term in history for insider trading."
US Attorney Preet Bharara welcomed the punishment as a deterrent, saying he hoped "this case will be the wake-up call we said it should be when Mr Rajaratnam was arrested. Privileged professionals do not get a free pass to pursue profit through corrupt means."
Rajaratnam was convicted in May on 14 counts of conspiracy and securities fraud related to his use of illegal insider tips for an edge on multi-million-dollar stock market trades on companies including Goldman Sachs, Intel Corp, and Google Inc.
The trial grabbed attention because it exposed deeply hidden corruption on Wall Street and because prosecutors took the unusual step of using telephone wiretaps to gather evidence for a white-collar probe.
Prosecutors asked that Rajaratnam be sentenced to as much as 293 months, or around 24 and a half years, in prison, and a minimum of 19 and a half years.
They told Holwell that Rajaratnam should be punished for personal gains and also for the money that his illegal trades earned Galleon.
Prosecutor Reed Brodsky argued successfully that Rajaratnam aggravated his crime by acting as leader of a wider conspiracy.
"Today you sentence a man who is the modern face of illegal insider trading," Brodsky said. "He is arguably the most egregious insider trader who faces sentencing in a federal courtroom in the United States."
But the defense appealed for clemency, pointing to his ill-health and saying the gains directly attributable to Rajaratnam were less than $8 million -- not the $72 million estimated by prosecutors. They argued that his sentence should be as low as six and a half years.
"He does not deserve to die in prison," attorney Terence Lynam said. "The sentence the government seeks is comparable only to (that for) murder."
According to Lynam, even without prison, Rajaratnam's fate will be a warning to other Wall Street traders. "No one here or anyone running a hedge fund would wish to trade places with Mr Rajaratnam."
Rajaratnam's lawyers have said they will appeal over the use of wire taps, the key to the prosecution case. However, that will be an uphill battle according to Holwell, who denied a request to free Rajaratnam on bail while the appeals process runs its course.
"I deny the defendant's motion for bail pending appeal," Holwell said at the end of the sentencing hearing. "I don't believe an appeal raises substantial questions of law."
