By Patricia Hurtado  -  January 31, 2013


Roomy Khan, the former Intel Corp. executive twice convicted of passing illegal tips to Raj Rajaratnam, was sentenced to one year in prison today.
 

Defense lawyers and prosecutors sought leniency for Khan from U.S. District Judge Jed Rakoff in Manhattan, saying she helped the government win convictions against hedge fund managers Rajaratnam, Doug Whitman and others. Khan was twice convicted of passing illegal tips to Galleon Group LLC co- founder Rajaratnam, once in 2001 and again in 2009.

Manhattan U.S. Attorney Preet Bharara’s prosecutors cited Khan’s cooperation in a letter to the judge, despite her having lied, destroyed evidence and tipped off co-conspirators to the government’s investigation when she was working with federal agents.

“The message from this court is that you cannot have it both ways, this is too serious,” the judge said. “You cannot have it both ways -- to cooperate and then, obstruct justice.”

Khan, who provided information that helped the U.S. get a court-authorized wiretap on Rajaratnam’s phone, asked for a term of five years’ probation. Khan had faced a maximum prison term of 25 years after pleading guilty in federal court in Manhattan in October 2009 to one count of conspiracy to commit securities fraud and one count of securities fraud.

Pleaded Guilty

The case was Khan’s second round of insider-trading charges. She pleaded guilty in 2001 to wire fraud and was sentenced in 2002 to home detention after agreeing to cooperate with a federal probe of Rajaratnam in California. Two years later, Khan said “untenable” financial pressures caused her to return to passing insider tips to Rajaratnam to give him an “edge.”

“As I reflect upon the choices I made, it makes me feel aghast at these decisions,” Khan said in her Jan. 22 letter to Rakoff. “No circumstances justify breaking the law. Because everyone is doing it provides no excuse to engage in this behavior. Especially I should have conducted myself better because I had gotten a break in the past!”

Rajaratnam, convicted in 2011, is serving an 11-year prison sentence. Her lawyer, Stanislao German, noted that other cooperators in the Galleon probe were spared prison terms and given probation. Khan said the strain of maintaining an extravagant lifestyle was the “albatross” around her neck that led her back to insider trading.

‘Desperate Need’

“Slowly, the immorality and unlawfulness of insider trading was replaced by the desperate need to make money and pay my mounting bills,” she wrote. “Over time, the shame and ignominy of losing my house and status in this society became more important than the unlawfulness of insider trading and the fear of getting caught.”

Khan, who has a degree in physics from Delhi University and a master’s in electrical engineering from Columbia University, said she lied to agents with the Federal Bureau of Investigation after pledging to help them so she could shield her friends.

Dozens of people have been convicted of insider trading as part of overlapping investigations tied to Rajaratnam’s hedge fund and related cases.

The case is U.S. v. Khan, 09-cr-00991, U.S. District Court, Southern District of New York (Manhattan).

http://www.bloomberg.com/news/2013-01-31/roomy-khan-gets-one-year-in-prison-in-insider-trading-case-1-.html