Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

Raj Rajaratnam and Danielle Chiesi were indicted in indictment alleging 17 counts of securities and wire fraud on Tuesday in the U.S. District Court for the Southern District of New York, U.S. v. Raj Rajaratnam et al, Case No. 09-2306, as reported by the New York Daily News here, here and here, and the New York Times here, here and here. Rajaratnam is a former Bear Stearns hedge fund manager and is the founder of Galleon Management LP, which managed some $3.7 billion in funds. Rajaratnam, a U.S. citizen born in Sri Lanka, was arrested on October 16 at his Manhattan home. U.S. Magistrate Judge Douglas Eaton set Rajaratnam's bail at $100 million which Rajaratnam posted. The indictment alleges a multi-million dollar insider trading scheme that spanned from coast to coast, in which Rajaratnam and Chiesi shared tips on companies like Google, Advanced Micro Devices, Hilton Hotels and others, and reaped more than $20 million in illicit profits by trading on the confidential information. Rajaratnam and Chiesi have both pled not guilty and are fighting the charges. The government claims to have numerous recorded telephone conversations from cooperating witnesses in support of the charges.

Rajaratnam's attorneys also requested a second time that his bail amount be reduced to $20 million. His lawyers disputed the government's reliance on Roomy Khan, an Intel Corp employee and former trader who was convicted of wire fraud in California in 2002 for passing confidential information to Galleon and Rajaratnam when she was an employee of Intel, and who is cooperating with the government. Half a dozen persons, including Ms. Khan, are cooperating in the case.

The U.S. Securities and Exchange Commission has also filed civil charges against Rajaratnam. Following Rajaratnam's arrest, investors withdrew more than $4 billion from various Galleon hedge funds, and the firm ceased operations.

The investigation has implicated 21 individuals, including 14 hedge fund managers, lawyers and other investors who were arrested in November. Robert Moffat, a senior official at I.B.M., Rajiv Goel, an executive of Intel; and Anil Kumar, an executive at the consulting firm McKinsey & Company, were arrested at the same time as Rajaratnam, but have not yet been indicted. The Court has granted the prosecution an extension of 30 more days to indict these individuals. The prosecution has described the case as the largest insider trading case in history.

Attorney Brien Santarlas, of the New York law firm of Ropes & Gray, pled guilty to conspiracy to commit securities fraud and wire fraud this week. Santarlas admitted that, from June 2007 to May 2008, he and another attorney, Arthur Cutillo, also with Ropes & Gray, used confidential information regarding acquisitions by 3Com, Inc., and Axcan Pharma, Inc. Bain Capital Partners LLC, a Ropes & Gray client, had announced it planned to acquire 3Com on September 27, 2007, in a deal which would have also involved China's Huawei Technologies Co Ltd. A U.S. government security panel rejected the deal, however. 3Com is now in the process of being purchased by Hewlett-Packard Co. Another Ropes & Gray client, TPG Capital LP, announced on November 29, 2007 that it was acquiring Axcan Pharma.Prosecutors charged Santarlas, Cutillo, Jason Goldfarb and Zvi Goffer with causing trades of 3Com and Axcan stock before the public announcements, making approximately $20 million in profits.Santarlas also faces civil charges by the SEC. His sentencing is tentatively scheduled for June 1. Cutillo was indicted in November.

Rajaratnam has also been linked to Steven Cohen, manager of SAC Capital Advisors, a hedge fund, major art collector, and with a $6 billion net worth, the 36th richest person in America. Cohen's ex-wife, Patricia Cohen, filed a lawsuit in Federal court on Wednesday alleging that Cohen had hid money during their divorce 20 years ago and asserting civil RICO claims. The former Mrs. Cohen alleges that Cohen had made millions from insider trading in the 1980s and had hid the money with the help of one of his real estate partners. Specifically, she claims that Cohen received an insider tip prior to General Electric's purchase of RCA in 1985. She is seeking $300 million from Cohen. SAC issued a statement criticizing the former Mrs. Cohen and her attorney, calling the allegations in the lawsuit "ludicrous" and "without merit."

Federal prosecutors on Wednesday asked for 30 more days to indict four defendants tied to the Galleon Group insider trading scheme, one day after two of the main players were formally indicted on conspiracy and fraud charges.

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On Monday, United States Supreme Court Justice John Paul Stevens s Justice Stevens called the Georgia Supreme Court's review of appeals in capital punishment cases "faulty" and "superficial," and stated that the Court's practices resulted in the "arbitrary or discriminatory" imposition of the death penalty, as reported in the Atlanta Journal & Constitution. Justice Stevens criticized the Georgia Supreme Court's "proportionality review," which evaluates whether the imposition of the death penalty is disproportionately severe when compared with similar cases. Justice Stevens' statements were made as part of the U.S. Supreme Court's denial of the petition for writ of certiorari the appeal of death row inmate Artemus Rick Walker, Walker v. Georgia, No. 08–5385. No other Justices joined Justice Stevens in his criticism, and Justice Clarence Thomas wrote an opinion criticizing Justice Stevens' statements and finding that the Georgia Supreme Court committed no error.

The AJC has conducted a study which found that the Georgia Supreme Court compares capital punishment cases only with other death cases, and not with similar cases in which a sentence of life imprisonment was imposed. The study further found that fully 19% of the cases relied upon by the Court to sustain death sentences have been reversed on appeal.

Walker received the death penalty after he was convicted for the May 12, 1999, murder of Ray Lynward Gresham, a bank executive in Macon County, Georgia. Walker had planned to rob Greshman, and stabbed him 12 times in the chest and back. The Georgia Supreme Court upheld Walker's sentence a year ago, citing 21 similar cases in which the death penalty was sustained in an appendix to the opinion. Several of the cited decisions involved double murders. The Court did not consider similar cases in which sentences of life imprisonment were imposed. Justice Stevens asserted that the Court had carried out a "perfunctory review," rather than a thorough proportionality analysis, but also rejected Walker's appeal on procedural grounds.

 

Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.

 

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     The Supreme Court placed a seven month moratorium on executions leading up to its decision in Baze v. Rees. Following Baze, Georgia became the first state to execute using lethal injection on May 6, William Earl Lynd, who had murdered his girlfriend two decades earlier. Samuel David Crowe would have been executed on May 22, but his sentence was commuted mere hours before his time of execution.  As reported in the Gainesville Times, Georgia will try again on June 4 when it will attempt to execute Curtis Osborne, who was convicted for murdering a couple in Spalding County in 1990. Mississippi and Virginia have also executed inmates following Baze,and Texas has 14 executions scheduled for the remainder of this year.
    One reason why Georgia was so quick to resume executions was that it has a shorter waiting period than other states between the time the death warrant is signed and the time that the State may move forward with the execution--just 29 days. Georgia's record for executions in a year was 23 set in 1935, when the State used the electric chair. Georgia adopted lethal injection as its method of execution in October 2001.
   

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     In its decision in Baze v. Rees, 553 U.S. ___ (2008) last month, the United States Supreme Court affirmed the judgment of the Kentucky Supreme Court that Kentucky’s lethal injection protocol, which involved the administration of four drugs: Valium, which relaxes the person; sodium thiopental, which renders the person unconscious; Pavulon, which stops the person’s breathing; and potassium chloride, which puts the person into cardiac arrest and ultimately causes his or her death, does not constitute cruel and unusual punishment. The primary opinion, authored by Chief Justice Roberts, noted that the petitioners had conceded that Kentucky’s procedure was humane if properly performed, and held that the petitioners failed to show that there was a risk that the procedure would not be properly followed—namely in the misadministration of the sodium thiopental—sufficient to present a “substantial risk of serious harm,” an “objectively intolerable risk of harm” in violation of the Eighth Amendment. The Court further rejected the petitioners’ showing of arguably safer alternatives which had not been tried or tested as a justification that Kentucky’s current method was “cruel and unusual.”

     Georgia will be the first state to execute a convict by lethal injection following Baze. William Earl Lynd was convicted of murder for shooting his girlfriend Ginger Moore in the head three times in 1988 and then burying her body near his Berrien County farm. After the shooting, Lynd fled to Ohio, where he shot another woman, Leslie Joan Sharkey, who had pulled over to help Lynd with car trouble. Sharkey gave a full account of the shooting to police before dying in a hospital three days later. Lynd then went from Ohio to Florida, where he eventually surrendered to authorities. He is scheduled to be executed tomorrow at 7 p.m. Lynd’s attorneys are making a last ditch appeal to the Georgia State Board of Pardons and Paroles to save Lynd’s life, arguing that the crime was not premeditated, since Lynd and Moore had consumed marijuana, Valium and alcohol on the day of the shooting.

     Mississippi is vying with Georgia to be the first state to execute by lethal injection following Baze, attempting to execute Earl Wesley Berry for a 1987 murder today, however the Attorney General has not received permission from the courts. There are currently 109 men and one woman on death row in Georgia, according to the Georgia Department of Corrections.

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