NEW YORK (TIP): Rajat Gupta, former Goldman Sachs Director, one of the highest ranking Indian Americans, was sentenced to two years in prison on Wednesday, October 24 for leaking Goldman Sachs boardroom secrets to the hedge fund manager Raj Rajaratnam.
Mr. Gupta, 63, who ran the consulting firm McKinsey & Company and served as a major adviser to the philanthropic efforts of Bill Gates and Bill Clinton, is the most prominent figure to face prison in the government’s sweeping crackdown on insider trading. The court also ordered Mr. Gupta to pay a $5 million. He will start his serving the jail term in January, 2013.
The sentence was imposed by U.S. District Judge Jed Rakoff, who wrestled over the course of a two-hour hearing with the question of why Gupta, a once-respected businessman, had turned his back on an “extraordinary” and “selfless” life to commit a crime he did not profit from directly.
“I have never encountered a defendant whose past history suggests such an extraordinary devotion … to people in need,” Rakoff said. Yet Gupta’s past good deeds “starkly contrast with the nature and circumstances of his crimes.”
A Manhattan federal jury found him guilty in June of feeding tips about Goldman Sachs at the height of the 2008 financial crisis to hedge fund tycoon Raj Rajaratnam, his friend and business associate. Rajaratnam is now serving an 11- year prison term for insider trading.
Gupta’s sentence was less than the eight to ten years sought by prosecutors, but more than the punishment of probation and community service that Gupta’s lawyers had requested.
“The fall from grace that Mr. Gupta has suffered or experienced as a result of this matter is as steep as … I have ever seen,” Gupta’s lawyer, Gary Naftalis, told the court. “This was an iconic figure who had been a role model for countless people around the globe. He is no more….. This is a fall from grace of Greek tragedy proportions,” Mr. Naftalis said.
As one alternative to prison, the defense had proposed “a less orthodox” plan in which Gupta would go to Rwanda to help fight HIV/AIDS and malaria in rural districts as well as work with a New York group focused on at-risk youth.
Bill Gates, Microsoft Corp’s co-founder, and former United Nations Secretary- General Kofi Annan were among 400 friends and luminaries who had written letters to the judge urging leniency
Federal judges have wide leeway in sentencing, and Rakoff has a reputation for veering from guidelines designed for courts in handing down punishment. Gupta had faced a maximum sentence of 20 years for securities fraud and five years for conspiracy.
A native of Kolkata, India, Mr. Gupta came to the United States to earn a graduate degree at Harvard Business School. He rose swiftly through the ranks of McKinsey and headed the firm for a decade. Mr. Gupta was a trusted adviser to the captains of industry, including Henry R. Kravis of the private equity firm Kohlberg Kravis Roberts & Company and Peter R. Dolan, the former chairman and chief executive of Bristol- Myers Squibb. A noted humanitarian, he has also played a leading role in organizations fighting diseases like AIDS, malaria and tuberculosis in povertystricken nations.