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Los Altos Hills Resident Spared Prison, Gets Probation in Massive Insider Trading Case

The Monday sentencing of Rajiv Goel, arrested in 2009 in the Galleon Group hedge fund case, was the coda of one of the biggest insider trading probes in history. Goel became a critical witness for the prosecution, expressing his shame for his role.

 

Los Altos Hills resident and former Intel Corp. executive Rajiv Goel escaped a 25-year prison sentence and received two years' probation in a Manhattan courtroom Monday for his role in the Galleon Group hedge fund insider trading case, described as one of the largest such probes in history by prosecutors.

Goel, a director of strategic investments at Intel's investment arm, Intel Capital, until his arrest in 2009, admitted supplying old classmate Raj Rajaratnam secret details about Intel's investments, according to the Associated Press.

“I am deeply ashamed for the mistakes that I have made,” Goel told the court in a Bloomberg News report. He apologized to those he had hurt by his actions, including his wife and children.

"I had a serious lapse of judgment and good sense. I deeply apologize, once again, and hope that I am given another chance to repair the harm that I have caused.”

Rajaratnam, was sentenced last October to an 11-year prison sentence after he was convicted of securities fraud charges for making inside trades that the government claimed earned him $75 million illegally. In the three years since, five others have been sentence: Danielle Chiesi, an employee of New Castle Funds, LLC, formerly the equity hedge fund group of Bear Stearns Asset Management, Inc.; Mark Kurland, a top executive at New Castle; Anil Kumar, a director at McKinsey & Company, Inc,; and Robert Moffat, Senior Vice President and Group Executive at IBM and Adam Smith, a former Galleon portfolio manager.

Goel was arrested with Rajaratnam in October 2009, and began cooperating soon after, becoming a key witness. U.S. Attorney Reed Brodsky said Goel's information became the basis of six of 14 crimes prosecutors filed against Rajaratnam.

Goel testified extensively at Rajaratnam’s trial about their two-decades-long friendship, starting with their meeting at the Wharton School of the University of Pennsylvania in 1983. They vacationed together, and Goel, who returned to the U.S. from India in 2000, had relied heavily on Rajaratnam financially, borrowing up to $100,000 to purchase a home, and $500,000 to care for his ailing father, the Bloomberg reported.

Goel, who addressed the court before his sentencing by Judge Barbara Jones, said he was "deeply ashamed," in reports written by the Associated Press and Bloomberg News, and had worked to make amends since the trial began and afterwards.

Defense attorney David Zornow had described Goel as a "perfect target" for Rajaratnam who was characterized as a master manipulator who abused his college friend's trust.

Jones ordered Goel to pay a $10,000 fine and forfeit $266,649 immediately.

Two others who cooperated with prosecutors had received two years' probation, like Goel—Anil Kumar, the former McKinsey & Co. partner and also another classmate and friend from Wharton, and Adam Smith, a former Galleon portfolio manager.

Goel left court accompanied by his family and his wife Alka and did not comment.

“It’s been a long three-year ordeal for Mr. Goel and he is looking forward to rebuilding his life and dedicating himself to the principles of integrity and that he grew up with,” defense attorney Zornow said in an interview with Bloomberg after court.

— Aggregated reporting from Bloomberg News, the Associated Press, and the New York Times, CNN and some original reporting by Los Altos Patch

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