Raj Rajaratnam seeks to cut 11-year insider trading sentence

NEW YORK (Reuters) - Galleon Group hedge fund founder Raj Rajaratnam plans to formally ask a U.S. judge to throw out his 11-year prison sentence and void many of the 14 counts for which he was convicted in his insider trading case.

Galleon hedge fund founder Raj Rajaratnam departs Manhattan Federal Court after his sentencing in New York October 13, 2011. REUTERS/Lucas Jackson

Rajaratnam, 57, has already served 3-1/2 years of his term following his May 2011 conviction on nine counts of securities fraud and five counts of conspiracy.

Prosecutors said he made up to $63.8 million in illicit profit from 2003 to 2009 by trading in stocks such as eBay Inc, Goldman Sachs Group Inc and Google Inc.

In a letter filed on Tuesday in Manhattan federal court, Christine Chung, a new lawyer for Rajaratnam, said “several” counts should be vacated because there was no proof the underlying trades amounted to insider trading.

Chung said that was because Rajaratnam did not know that people who may have given him tips had received the information in exchange for personal, consequential benefits, as required in a December ruling by the 2nd U.S. Circuit Court of Appeals.

The letter also said Rajaratnam will seek to vacate two counts because former McKinsey & Co partner Anil Kumar, the main government witness against him, perjured himself.

It said this perjury was shown by testimony that Kumar gave at a trial against Rajaratnam’s brother Rengan, who was acquitted last July of conspiring to engage in insider trading.

Gregory Morvillo, a lawyer for Kumar, in an email said his client testified “accurately, truthfully and to the best of his recollection.”

He also said Raj Rajaratnam’s wife “recently contacted Mr. Kumar asking him to recant his testimony and Mr. Kumar explained that he had testified truthfully and would do no such thing.”

Chung could not immediately be reached for comment. A spokesman for U.S. Attorney Preet Bharara in Manhattan declined to comment.

Rajaratnam plans to formally request to vacate his sentence by June 16, which is one year after the U.S. Supreme Court refused to hear his appeal of his conviction.

He is not eligible for release until July 2021.

Kumar was sentenced in 2012 to two years probation, in part because of his help in securing Rajaratnam’s conviction.

The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 09-cr-01184.

Reporting by Jonathan Stempel in New York; Editing by Grant McCool