| NEW YORK
NEW YORK May 30 Former Goldman Sachs Group Inc
director Rajat Gupta will begin serving a two-year prison
term on June 17 after a U.S. federal appeals court rejected his
bid to stay free while he appeals his insider trading
In a brief order on Friday, the 2nd U.S. Circuit Court of
Appeals in New York rejected a request by Gupta, a former global
managing director of consulting firm McKinsey & Co, to delay his
surrender and remain free on bail.
Gupta, 65, was convicted in June 2012 of feeding tips from
Goldman board meetings to longtime friend Raj Rajaratnam,
founder of the Galleon Group hedge fund firm.
Evidence included a September 2008 phone call, just before
Goldman announced a $5 billion investment from Warren Buffett's
Berkshire Hathaway Inc, in which Rajaratnam was heard
telling a trader that he learned from a source, who prosecutors
said was Gupta, that "something good might happen to Goldman."
It also included an October 2008 conversation in which
Rajaratnam told a colleague that a Goldman director had tipped
him that the bank would post a quarterly loss.
A three-judge 2nd Circuit panel rejected Gupta's appeal on
March 25. Gupta sought to stay out of prison while the full 2nd
Circuit Court, and perhaps the U.S. Supreme Court, reviews his
Rajaratnam is appealing his conviction to the Supreme Court.
He is serving an 11-year prison term.
Seth Waxman and Gary Naftalis, two of Gupta's lawyers, were
not immediately available for comment on Friday.
His lawyers have argued that Gupta's conviction was tainted
by U.S. District Judge Jed Rakoff's decision to admit wiretap
evidence at trial, and the judge's refusal to tell jurors that
Gupta's good character could raise a reasonable doubt of guilt.
The lawyers also said Gupta is neither a flight risk nor a
danger to the community.
Gupta is the highest-ranking corporate official and
Rajaratnam the highest-ranking portfolio manager convicted in a
broad insider trading probe unveiled by federal prosecutors in
October 2009. Roughly 80 people have been convicted or pleaded
Rakoff has agreed to recommend that Gupta be assigned to a
medium-security prison in Otisville, New York, about 70 miles
(113 km) northwest of New York City.
The case is U.S. v. Gupta, 2nd U.S. Circuit Court of
Appeals, No. 12-4448.
(Editing by Howard Goller and Jeffrey Benkoe)