Judge Jed Rakoff sentenced disgraced former Goldman Sachs board member Rajat Gupta to two years in prison for insider trading. (AFP/Getty Images)
He wanted to serve the underfed. Instead he’s going to Club Fed.
Ex-Goldman Sachs director Rajat Gupta was sentenced yesterday to two years in prison and ordered to pay a $5 million fine after a judge dismissed his request to do community service in rural Rwanda as “Peace Corps for insider traders.”
Still, the disgraced business bigwig received the lightest sentence yet for someone convicted at trial in the government’s massive crackdown on Wall Street insider trading.
Gupta, who once ran prestigious consulting firm McKinsey, was convicted in June for leaking tips to hedge-fund billionaire Raj Rajaratnam, who is serving 11 years in federal lockup.
The former Street highflyer was found guilty on three counts of securities fraud and one count of conspiracy, including tipping Rajaratnam to Warren Buffett’s $5 billion investment in Goldman at the height of the financial crisis.
His sentence fell far short of the maximum 10 years argued for by Manhattan US Attorney Preet Bharara. He abused “an extraordinary position of trust” as a Goldman director, Bharara said.
While Judge Jed Rakoff didn’t oblige, he mocked the request by Gupta’s lawyers that he be put on probation and do community service in rural Rwanda.
“The thought that came to mind when I read about [the request] was Peace Corps for insider traders,” Rakoff joked.
While the judge said Gupta deserved some credit for his humanitarian work combatting AIDS and malaria, he said he should get more than a slap on the wrist.
“He is a good man, but the history of this country and the history of this world is full of examples of good men who do bad things,” Rakoff said.
Gupta was granted leniency in part because he did not profit from the tips he passed on to the former Galleon hedge chief and was seeking instead to curry favor with others on the Street.
“He wasn’t doing it for the money,” Rakoff said.
The judge denied Gupta’s request for bail pending appeal and ordered him to surrender to authorities on Jan. 8 to begin serving his sentence. Gupta’s lawyers are asking that he be sent to minimum security prison in Otisville, NY.
“I regret terribly the impact of this matter to my friends and the institutions that are dear to me,” Gupta told the court before sentencing.
He expressed regret for putting his family through the ordeal, saying, “Every time I look at their faces I get overwhelmed by a sense of letting them down.”
His wife Anita, who donned dark sunglasses for much of the sentencing, and their four grown daughters wept at times during the nearly three-hour hearing.
Gupta, 63, who also sat on the board of Procter & Gamble, rubbed elbows with numerous business big shots before he was snared in the crackdown.
Among those who sought leniency were Microsoft co-founder Bill Gates and former UN Secretary General Kofi Annan, who both wrote letters on his behalf.