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Raj Rajaratnam, convicted of insider trading charges and now free after more than 7 years in federal prison, has authored a new book, Uneven Justice<\/a>, about his experience of being prosecuted in the Southern District of New York. Fellow Forbes contributor John Tamny wrote<\/a> a great piece on the book and Rajaratnam\u2019s case.<\/p>\n Rajaratnam gave me an extensive interview where he talked about his book, his life now and reflections on the case that forever changed his life. He did not seem bitter, in fact, he seemed at peace with his life now. Part of that life is speaking to media, discussing his book and sharing insights on his very downfall. While he was critical of the criminal justice system, he said that he just wants to shine a light on a system that, admittedly, he knew little about until the Federal Bureau of Investigation knocked on his door with guns drawn placing him under arrest. Here are some excerpts from our conversation.<\/p>\n NEW YORK, NY – MAY 11: Galleon Group founder Raj Rajaratnam (C) is confronted by media as he leaves … [+]<\/span> the Daniel Patrick Moynihan United States Court House at 500 Pearl Street after being found guilty of 14 charges against him on May 11, 2011 in New York City.<\/span><\/p>\n <\/fbs-accordion>Getty Images<\/small> Question:<\/strong> Once indicted, you spent a considerable amount of time closing the firm, talking to clients, talking to employees, trying to mount a defense for your case, speaking to family and friends and finally, taking some time for yourself.\u00a0Describe that life and how you made it through that.<\/p>\n Rajaratnam:<\/strong> When the FBI showed up at my house I thought, \u2018this must be a mistake.\u2019 Once I got down to the federal building in lower Manhattan they showed me charges and I was thinking that they really have made a mistake. I got an attorney and put my team together and I remember asking them how much time would I have to spend working on the case myself. They told me 3-4 hours a day during the workweek. I knew then that I would have to shut the firm. People gave Galleon their money to invest believing that we were good stewards of their investment. Once I knew that I could not dedicate my full resources to them, I shut it down. It was heartbreaking and I helped as many people as I could to find other work. It was then that I got really angry and said I am going to fight this with everything I have.<\/p>\n However, it was not long before the FBI started showing up at those employees\u2019 doors telling them that \u2018Raj was going to throw them under the bus.\u2019 Suddenly, I have nobody calling me and my attorney John Dowd told me to avoid the media. This while the government was leaking information to the media everyday. That 3-4 hours a day estimate of being dedicated to my case turned into 10-12 hours a day every day of the week of going over trades, emails and instant messages. \u00a0I had a small team of Galleon employees who helped me assemble all the information we needed to assist in going through the massive amount of data. I refused to watch the news and instead looked at the data to uncover the truth. It was tedious work.<\/p>\n Question: <\/strong>What was your reaction to your attorneys explaining the Federal Sentencing Guidelines and how much time it could mean in prison?<\/p>\n Rajaratnam:<\/strong> I had never heard of the Federal Sentencing Guidelines. I didn\u2019t know anyone who had been to prison and I didn\u2019t know anyone who knew someone who went to prison. Before all this happened I assumed, probably like anyone, that there is a justice system and the bad guys go to prison and the good guys are either not indicted or they prove their innocence.<\/p>\n When John [Dowd] told me that if things went bad I could be looking at 20 years in prison. It was sobering. I had picked Dowd because a good friend of mine told me to not pick a New York attorney because they just cut you the best deal with the prosecutors at the Southern District of New York where they used to work. Dowd was in Washington DC and once I laid out the information he told me that we could win. When we found that the FBI had overreached on the warrant for monitoring our calls, we again thought we could win. When we looked at the two primary witnesses who testified at the grand jury to get me indicted, then we found out that they were nowhere to be seen at my trial … again we felt confident. I expected a fair fight but the rules seemed to change for me. It\u2019s like showing up for a football game and the opposing team is using 3 quarterbacks with 3 footballs.<\/p>\n Question:<\/strong> What are your thoughts on Galleon and the people who worked for you there?<\/p>\n Rajaratnam:<\/strong> I still feel awful about what happened and all of the people who were hurt, I think unnecessarily. Those employees did their job and we had analysts with MBAs, undergraduates with engineering degrees, we had PhDs on staff. These were hard working people, smart people. What is not known is the personal stories of fear, intimidation by government law enforcement, legal costs, the hurt of the families involved in these prosecutions that were more about seeking glory than justice. The banking crisis needed a culprit and hedge funds were targeted when the banks would not be held accountable. Those prosecutions of Operation Perfect Hedge made the careers of judges, FBI agents, prosecutors and US Attorney Preet Bharara. It ruined careers of many qualified people and took an untold toll of the lives of those in their family.<\/p>\n Question: <\/strong>What did you make of your life in prison?<\/p>\n Rajaratnam:<\/strong> I went to bed overnight with a clear conscience and slept well. I left everything I had in the courtroom and felt I cleared my name but the jury saw it different. When they did, I walked into prison with my head high. I did for a time have the opportunity to serve time with Rajat Gupta [former Goldman Sachs board member and managing director of McKinsey & Co.]. We played bridge and chess on occasion. As I noted in the book, the Gupta allegations were nothing and neither of us dwelled on it there [FMC Devens, Massachusetts].<\/p>\n I wrote the book Uneven Justice<\/em> in prison, by hand. I have a new admiration for the likes of Mark Twain because thinking and the physical act of writing is tiresome. It was a joy to write in order to pass the time and think about what had happened. It was therapy to put down on paper what I felt and had carried around in my mind for so long. To free myself with what happened to me and tell the world things they would have never known about the case.<\/p>\n Question:<\/strong> Is it fair to compare the average investor to sophisticated traders like that of firms like Galleon?<\/p>\n Rajaratnam:<\/strong> I don\u2019t think the FBI, the judges or the prosecutors ever understood the hedge fund industry. Just as an example, large banks host conferences for a business segment, say healthcare. There will be hundreds of executives from various healthcare companies there to give comments on their stock, the state of the business and future opportunities. Then there are breakout sessions where our analysts would have meetings, some one-on-one, with executives of a major corporation. There is an active discussion and questions are asked. Those questions that hedge fund analysts asked represented hundreds of hours of research on the industry, the company and its competitors. The answers provide insight on which we made decisions to trade. There is no way that the average investor can compete at that level nor did we ever see the average investor as our competitor. Other hedge funds were our competitors. For US Attorney Bharara to state at the time that information we were obtaining was somehow different from that of the average investor was disingenuous and not reflective of the nature of our work. Not only was his portrayal inaccurate, he went so far as to make it a crime when none existed.<\/p>\n Even Bharara, after being fired as US Attorney, went on to have a think group or something of the kind on insider trading laws, which concluded that insider trading laws needed reform. That remarkable conclusion was made by the Bharara Task Force<\/a> in 2020, years after his office abused the existing laws to wrongfully put people in prison. That conclusion might be the only thing I agree with Bharara on.<\/p>\n Question:<\/strong> What do you think about the outcome of the government\u2019s case against Steven A. Cohen, former head of SAC Capital Advisors (now renamed Point72 Assets Management)? Cohen was a target in SEC investigations but the Department of Justice never levied criminal charges against him personally.<\/p>\n Rajaratnam:<\/strong> Steven Cohen doesn\u2019t occupy much space in my mind. I have no insight into how he conducted business but I will say, having met him a few times, he is one of the greatest equity traders of our time. He\u2019s quite successful and had the unfortunate prosecution of me not occurred, I might not own the New York Mets, but I might own a cricket team [Rajaratnam said in jest while chuckling].<\/p>\n Regarding money I am not envious of anyone and would not wish what happened to me on anyone in our industry. I was a supporter of many charities, here in the U.S. and in my home country of Sri Lanka before the prosecution and I am still one today. While I loved Galleon and what we built, I am happy to be out of that business now. What I have now is a better life.<\/p>\n Question:<\/strong> What made Preet Bharara so successful in his prosecutions of so many \u2026 and what do you make of his lack of being much since leaving the office?<\/p>\n Rajaratnam:<\/strong> I spoke to many former prosecutors, most of which had become defense attorneys, who worked with Bharara when he was an Assistant US Attorney before President Barak Obama appointed him to US Attorney for the Southern District of New York. What they told me is that he was a good attorney who spent most of his time on drug trafficking cases. However, it was clear, according to those accounts, that no matter how small the case, Bharara loved to create a circus environment where he was the ringmaster. I have to admit he did a masterful job of avoiding going after the real bad guys of the financial meltdown, investment banks, and targeted hedge funds. I think everyone believed we had somehow caused all this harm on Main Street. It was a fake narrative but it was effective to achieve Bharara\u2019 agenda. Justice should not look like that.<\/p>\n Bharara\u2019s last bit of spotlight happened when he tried to stay on to be in the Southern District of New York after President Trump took office. In what has been a tradition for decades, Bharara was to submit his resignation and allow Trump to appoint his own US Attorney for the District. Bharara refused to resign, choosing a more public forum to shine the light on himself one more time, before fading away. Trump fired him and that was pretty much it for him. I thought I would see more of Bharara in politics or government but thankfully that has not happened. Perhaps his glory has run its course or he could be seeking it in his new children\u2019s book \u201cJustice Is<\/a>\u201d which comes out in January 2022. I won\u2019t be reading it.<\/p>\n Question:<\/strong> What are your thoughts on criminal justice and what cases do you follow today?<\/p>\n Rajaratnam:<\/strong> I look for cases where there is an overzealous prosecution that overstep the checks and balances of our courts, leading to unnecessary incarceration of people. We have reached a tipping point and the Bureau of Prisons is broken. I had no problems with the BOP while I was inside as I was focused on writing and understanding the events that took me to prison. I had over 100 visitors on my list at Devens [federal prison in Massachusetts] and each Friday, Saturday and Sunday I had friends or family visiting me. Covid has really taken all that away from those locked up today but my experience went by quickly.<\/p>\n I am watching the Elizabeth Holmes, Theranos case. I must admit that I have not followed it as closely as I should have, but I do see that it has all of the hallmarks of the Witch Hunt media coverage that surrounded our cases in New York.<\/p>\n Question:<\/strong> How are people reacting to you since being home?\u00a0Do any people from your old days at Galleon reach out? Have past business associates reached out?<\/p>\n Rajaratnam:<\/strong> Everyone has been so supportive. I cannot thank my family and close friends enough for their support during the trial, during prison and certainly coming home.<\/p>\n Many former Galleon employees have reached out since being released from prison and we are in touch consistently. I would enjoy having a book party with many friends and families from the Galleon days to celebrate what we accomplished then. I also want a chance to talk to them again since that dreadful day I had to gather them in a conference room and tell them that the fund would be closing. I think it would be a good way to bring closure for many of us.<\/p>\n There are lessons that can be learned from this tragedy and I am not looking for revenge, because I have a lot of life to live. It happened, now I have written and closed that chapter on that part of my life. I am a lucky man.<\/p>\n I am reminded of the words of Confucius, \u201cBefore you embark on a journey of revenge, dig two graves.<\/em>\u201d<\/p>\n I think I\u2019ll just tell a story and people can decide on their own.<\/p>\n More on Rajaratnam\u2019s story can be found at his website www.UnevenJustice.org<\/a>.<\/p>\n<\/div>\n
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