Rajat Gupta

English: Rajat Kumar Gupta, Chairman of the Board, The Global Fund to Fight AIDS, Tuberculosis and Malaria; Senior Partner Emeritus, McKinsey & Company, USA; Member of the Foundation Board of the World Economic Forum, captured during the session 'Completing the Malaria Mission' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 31, 2009. (Photo credit: Wikipedia)

Here is what we are reading today on white-collar crime:

Rajat Gupta Told to Pay Restitution to Goldman Sachs (DealBook) - A federal judge on Monday ordered Rajat Gupta, the former Goldman Sachs director, to pay the bank more than $6.2 million to reimburse it for legal expenses connected to his insider trading case.  Last May, a jury convicted Mr. Gupta, 64, of leaking boardroom secrets about Goldman to the hedge fund manager Raj Rajaratnam. The presiding judge, Jed S. Rakoff, sentenced Mr. Gupta to two years in prison. He free on bail while he is appealing the conviction.

The Challenge of Sentencing White-Collar Felons (DealBook) - Are white-collar defendants treated more favorably than other criminals when it comes to sentencing? A case involving the chief executive of a technology firm in Ohio that collapsed in 2003 after fraud allegations seems to indicate that perhaps there is such a thing as being too lenient, according to a Federal Appeals Court.  The recent case involves Michael E. Peppel, the former chairman and chief executive of MCSi, who pleaded guilty to conspiracy, money laundering and filing false documents with the Securities and Exchange Commission. Federal authorities said he inflated revenue and earnings to prop up MCSi’s stock price at a time when the company was failing after years of having grown through acquisitions.

Organic Food Fraud Hits Europe (Reuters) - The northern state of Lower Saxony, a major agricultural hub, has launched probes of some 150 farms suspected of wrongly selling eggs produced by hens kept in overcrowded conditions under the organic label.  Two other states are investigating a further 50 farms.  "If the accusations (against the farms) are found to be true, then we are talking of fraud on a grand scale: fraud against consumers but also fraud against the many organic farmers in Germany who work honestly," German Farm Minister Ilse Aigner said in a statement on Monday.  Probably a problem here in the U.S. as well.

NEW YORK, NY - MAY 21: Former Goldman Sachs board member Rajat Gupta holds an umbrella as he leaves a Manhattan federal courthouse on Monday, May 21, 2012 in New York City. Jury selection and opening arguments began today in the trial for former Goldman Sachs board member Rajat Gupta who is being accused of insider trading with his friend, now-imprisoned hedge fund manager Raj Rajaratnam. (Image credit: Getty Images via @daylife)

What kind of prison term will Rakoff Give Gupta (Forbes) - I tried to get into the mind of U.S. District Judge Jed Rakoff as he considers the type of sentence he will hand down to former McKinsey & Co. chief Rajat Gupta.  Rakoff is known for giving sentences in white-collar cases that are far below the Federal Sentencing Guidelines.  The government is asking for 10 years, I'm thinking the judge will give Gupta something like 3 years.

Bernard Kerik Testimony Conflicts With Earlier Plea Deal (NY Post) - Former NYC Police Chief Bernard Kerik is currently a federal inmate who in incarcerated as a result of a guilty plea on bribery charges.  However, Kerik is in New York this week to testify against two brothers who supposedly gave money (home improvements) to Kerik in return for favors.  It now seems that Kerik can't recall if any bribes were given by the two, which conflicts with his own plea agreement.  Perhaps some additional charges of lying to a federal judge are on the horizon.

Stanford Financial Trial of Two Accountants Begins (Clarion Ledger) - The trial of two accountants started today in Houson.  The two were in charge of financial transactions that involved inflating the value of property under the Stanford Financial umbrella....though it is argued that they knew about a lot more.  Their trial starts as their old boss, James Davis, is prepared to testify against them and the firm's founder, Allen Stanford, sits in a Florida federal prison serving a 110 year sentence.  It doesn't look good.

Ex-GE Bankers Get Prison for Muni-Bond Rigging Scheme (Bloomberg) - Three former bankers were each sentenced to prison today for their role in rigging bids for investments related to municipal bond proceeds.  The men were convicted at trial for steering business to investment firms in exchange for kickbacks.  Those firms, including GE, have paid over $700 million in fines to settle the charges.  The prison sentences ranged from 4 years for Steven Goldberg and 3 years each for Peter Grimm and Dominick Carollo.

English: Rajat Kumar Gupta, Chairman of the Board, The Global Fund to Fight AIDS, Tuberculosis and Malaria; Senior Partner Emeritus, McKinsey & Company, USA; Member of the Foundation Board of the World Economic Forum, captured during the session 'Completing the Malaria Mission' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 31, 2009. (Photo credit: Wikipedia)

Rajat Gupta Gets Support Prior to Sentencing (Bloomberg) - The former McKinsey Exec, former board member of American Airlines, Goldman Sachs, Proctor & Gamble, Rajat Gupta, is expected to be sentenced to Federal Prison on October 24.  Gupta, who was convicted in June on insider trading charges (passing stock tips on Goldman Sachs) has received a number of letters of support, which as for mercy during sentencing.  Some of those letters are from Microsoft's Bill Gates and Fmr UN Secretary General Kofi Annan.

'Jewish Indiana Jones' Gets 4 Years in Prison (JTA) - Rabbi Menachem Youlus told stories of rescuing Holocaust-era Torah scrolls which would have otherwise been lost to history.  Sadly, those stories were lies and Youlus admitted it in February of this year. Last week, he was sentenced to 51 months in prison by a federal judge for fraud.

Physician Brought To Justice for Insurance Fraud (Chicago Tribune) - A Chicago doctor was being investigated in 2004 for filing false insurance claims on behalf of patience and also doing unnecessary treatments.  As authorities closed in, Dr. Mark Weinberger decided to take a long trip on his 80' yacht and was not seen again for 5 years.  He was captured in 2009 and has been in prison ever since .... and he will be in a while longer as a federal judge gave him a full 7-years in prison.

Nashville Man Gets 9 Months in Prison For Being Late to Halfway House (Tennessean) - A Tennessee man held a job while working at a halfway house as part of completing his prison sentence.   While at work, he learned that his girlfriend had collapsed at home and was taken to the hospital.  Without thinking, he rushed to the hospital without thinking of checking in with the halfway house who had reported him as an "escape" to federal authorities.  A judge sentenced the man to an additional 9 months in prison.

NEW YORK, NY - APRIL 12: Billionaire Galleon Group hedge fund cofounder Raj Rajaratnam enters a Manhattan Federal Court on the second day of the defense phase of his trial for insider trading on April 12, 2011 in New York City. Prosecutors allege that Rajaratnam pocketed $45 million by illegally trading on insider stock tips. While Rajaratnam's lawyers contend that he made legal trades using public information, prosecutors have called it the largest-ever hedge fund insider trading case. (Image credit: Getty Images via @daylife)

Insider Trading Trial Starts in NYC Today - 500 Pearl Street will be buzzing today as two big criminal trials start.  The first (see other case below) involves insider trading with Mark Whitman (hedge fund manager at Whitman Capital, LLC).  At issue is whether Whitman knew that information he was getting through expert network firms was confidential (illegal) information.  One cooperating witness in the trial will be Roomy Khan, who is believed to be the initial person responsible for aiding the government in its large insider trading prosecutions that have led to the jailing of Raj Rajaratnam (Galleon Group) and the successful conviction of former Goldman Sachs board member  Rajat Gupta.

Ex-UBS Execs On Trial For Bond Bid-Rigging Case - On the heels of the successful prosecution of 3 executives at General Electric who were involved in bid-rigging, comes the trial of 3 more executives who worked at UBS.  The banks that all of these executives worked for (UBS, JPMorgan, Bank of America and General Electric) have already settled claims with the government by paying $700 million.  The execs are accused of giving kickbacks to brokers hired by local governments to solicit bids, seeking to win auctions and increase their profit.

Insider Trading Ahead of Cnooc - The SEC obtained a court order to freeze assets of traders who allegedly profited over $13 million by illegally trading ahead of the Cnooc Ltd. announcement that it would buy Canadian-based Nexen for $15.1 billion last week.  The SEC claims that Hong-Kong-based Well Advantage Ltd. purchased shares of Nexen ahead of the announcement based on inside information.  It looks like the SEC is moving much quicker on enforcement these days and making legal moves based on suspicious trading activities.

Profile of THE INSIDE TRADER of a Generation - Business Insider did an entertaining profile of the real Gordon Gekko, Ivan Boesky.  Boesky, still handing tough at 75, lives a much lower profile life in southern California.

Prison Guards Behaving Badly - With a big prison system comes challenges of managing employees' behavior.  Where most prison guards get in trouble for sneaking in tobacco or cell phones to inmates, others get personal with intimate relationships with those they are supposed to be guarding.  Still others take advantage of those incarcerated by stealing their identification.  One tax perparer worked with a prison guard in Florida to steal inmates' names and SS #s to file false tax returns.  The former guard, Kimberly Kakia Lewis, will be spending 25 months in federal prison as a result of her participation in the crime.

NEW YORK, NY - MARCH 08: Billionaire Galleon Group hedge fund cofounder Raj Rajaratnam departs Manhattan Federal Court at the end of the first day of his trial on insider trading charges March 8, 2011 in New York City. Prosecutors allege that Rajaratnam pocketed $45m by illegally trading on insider stock tips. (Image credit: Getty Images via @daylife)

Former Galleon Trader Gets 2 years Probation - Adam Smith was a trader at Galleon Group working for Raj Rajaratnam.  Smith, like others at Galleon, quickly found sources of insider information, confidential information to use as part of his "strategy" at Galleon.  However, he began cooperating with the government and testified against his old boss Raj last year.  Raj is now doing 11 years in federal prison and Smith, for his contribution, will be doing 2 years of probation.  It pays to cooperate, but Smith was also lucky.  Not only did he participate in insider trading schemes after Raj's arrest, but he destroyed evidence that the government could have used in its investigation.  To get off with such a light sentence, he must have had some good information .... and that made him lucky.  Lucky, but a man with no friends now.

Another Insider Trader Arrested - The line is long of cases for those involved in insider trading.  Tai Nguyen, president of Insight Research LLC pled guilty yesterday to passing confidential information to hedge fund personnel, including those who worked at SAC Capital and Galleon Group.  Nguyen faces between 46-57 months in prison.

Arrest of the Nerds - The FBI arrested 24 people in a massive hacking scheme that was used to create fake credit cards, robbing consumers of over $205 million authorities said.  All of those arrested were males, aged 18-25.  They all face decades in prison if convicted.  Expect some plea agreements to follow soon.

Novel Way of Reducing Prison Sentences - In the U.S., lawmakers are looking for ways to reduce the costs associated with incarceration.  In Brazil, they have come up with a unique way of cutting prison terms by as much as 48 days per year for each inmate ... if they read a book and give a book report.  In a program designed to educate, deter future criminal activities and return a better person to society, the Brazilian government has started a program of having inmates read books and submit a book report.  Successful completion of the book results in a reduction in their sentence.  The maximum reduction available is 12 books/year that would cut 48 days off of the prison term.  Thinking outside the box!