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A judge slapped him with a record 11-year prison stretch for insider trading — and that was the good news.
Fallen hedge-fund titan Raj Rajaratnam yesterday dodged a much longer prison term prosecutors sought for his epic spree of crooked stock picks when Manhattan federal Judge Richard Holwell took pity on him because of his dire health.
Holwell named the former Galleon Group chief’s “advanced diabetes leading to imminent kidney failure” and his “need for transplant surgery” as mitigating factors in cutting him a break from the 19-plus years he’d faced.
“I am … certain of the fact that prison provides a more intense form of punishment for critically ill prisoners,” Holwell said.
“Illness does not provide a get-out-of-jail-free card, but some form of forbearance, however constrained by circumstances, is fundamental to our system of justice and is appropriate here.”
Court papers revealed that Rajaratnam suffered a “severe stroke” of unknown cause in 2007, more than two years before he was arrested for masterminding the biggest hedge-fund insider-trading scheme in US history.
Rajaratnam, 54, stood stock still as his sentence was read and smiled slightly when one of his lawyers clapped him on the shoulder after Holwell left.
Earlier, he turned down a chance to plead for mercy.
Holwell had also cited Rajaratnam’s extensive history of charity and good deeds, noting more than 200 letters written on his behalf and observing that he went “beyond the norm” in sharing his wealth with the needy.
In addition to prison time, Holwell ordered the one-time billionaire to pay a $10 million fine and forfeit an agreed-upon $53.8 million in ill-gotten gains.
Rajaratnam ignored reporters’ questions as he left the courthouse. His wife, Asha, who sat in the gallery, did the same as she left out a different door.
It was the first time she’d gone to court since her hubby, with whom she has three children, was arrested in October 2009.
The Sri Lankan native is scheduled to surrender on Nov. 28, and Holwell agreed to recommend he get locked up in a medical center at the same Butner, NC, prison complex where mega-Ponzi schemer Bernard Madoff is serving his 150-year sentence.
Rajaratnam’s sentence is the longest ever for insider trading, just beating the 10 years imposed on former Credit Suisse investment banker Hafiz Naseem and ex-Galleon trader Zvi Goffer.
Prosecutor Reed Brodsky said Rajaratnam pocketed more than $70 million in “gains and losses avoided” by amassing a network of sources who leaked him corporate secrets.
Brodsky noted that Rajaratnam, whom he called “arguably the most egregious inside trader” ever convicted, was busted only through the first-ever use of phone wiretaps in an insider-trading case.
Defense lawyer Samidh Guha said Rajaratnam would challenge his conviction over those wiretaps, calling it a “close issue.”