Rajaratnam seeks delay in reporting to prison

Dec 01, 2011 |

New York

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Just five days before he was due to start his 11-year jail term for insider trading, hedge fund founder Raj Rajaratnam's lawyers made a last ditch effort to keep him out of jail, asking a US court to let him be free on bail while he appeals his conviction.

54-year-old Rajaratnam's prison sentence is scheduled to begin on December 5 at a federal penitentiary in Massachusetts.

A three-judge panel in the US Court of Appeals for the Second Circuit is reviewing a trial court judgement that had refused to grant bail to Sri Lanka-born Rajaratnam while he appealed his conviction.

The panel reserved its judgement and is expected to announce it before the end of the week. During Wednesday's hearing, the judges focussed on whether Rajaratnam is a flight risk if he is allowed to remain free on bail.

"Wouldn't he rather be living as a centimillionaire in his own country rather than as a convict in a jail?" Judge Dennis Jacobs asked Rajaratnam's lawyer Patricia Millett.

Millett argued that her client cannot fly to Sri Lanka as his family lives in the US and his passport had been surrendered to authorities.

She also put forth the point that Rajaratnam's health is falling and he needs a kidney transplant. He is required to take 13 medications a day and would not get the required medical care in Sri Lanka.

Federal prosecutor Jonathan Streeter said Rajaratnam had strong ties to his native country and had the financial strength to flee. Rajaratnam is currently under house arrest at his Manhattan apartment.

His appeal of his conviction on 11 criminal charges is expected to focus on whether the government properly won permission to record his phone calls.

The appeal process could take a year. Prosecutors have called Rajaratnam the 'modern face of insider trading'.

He made millions in profits on the basis of inside information he received from his associates including from former Goldman director and his Indian-origin friend Rajat Gupta who has also been indicted on securities fraud charges and will face trial next April.

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