Michael Bobelian, Contributor
I cover the Supreme Court, the law and its interplay with Wall Street
It’s good to have friends in high places. That’s the common refrain, at least. On October 24, we will get to see whether that’s the case for Rajat Gupta, the former McKinsey & Co. chief executive set to be sentenced for insider trading.
“His contributions,” wrote Microsoft founder Bill Gates in reference to Gupta’s philanthropic work in global health, “have made a real difference in the lives of literally millions of people around the world.” Gupta worked with the Bill & Melinda Gates Foundation, the software king’s expansive philanthropic institution.
In another letter addressed to Federal District Court Judge Jed S. Rakoff, who will determine the length of Gupta’s sentence, former U.N. Secretary General Kofi Annan described Gupta’s devotion “to projects that are wholly admirable and worthy of praise.”
Others contributing to the more than 400 letters written on Gupta’s behalf – including Deepak Chopra, former Bristol-Myers Squibb CEO Peter Dolan, and Abbott CEO Miles White – echoed these sentiments.
“While it depends on the judge,” explained Solomon L. Wisenberg, the co-chair of the White Collar Crime Defense Practice Group at Barnes & Thornburg, “most judges pay a lot of attention to these letters.”
When the Supreme Court struck down mandatory sentencing guidelines in 2005, added Wisenberg, it granted judges a great deal of discretion in issuing sentences. That’s where these letters and other factors, like a defendant’s health, play a role.
Gupta’s lawyers have also pointed to his broad array of philanthropic work and personal engagement in these efforts – what they dubbed a “lifetime of good works” – as a key mitigating factor in asking for a sentence with no jail time. Gary Naftalis, Gupta’s chief defense attorney, has instead urged Judge Rakoff to issue a sentence of probation with extensive community service.
The government, on the other hand, has asked for a sentence of 8 to 10 years, which falls in line with the suggested sentencing guidelines.
In June, a jury found Gupta, a former board member at Goldman Sachs and Procter & Gamble, guilty of three counts of securities fraud and one count of conspiracy for passing on inside information to Raj Rajaratnam, the former head of the Galleon Group hedge fund found guilty of 14 counts of conspiracy and securities fraud last year.
As the ring-leader of a widespread conspiracy, Rajaratnam received an 11-year prison term, far lower than the government’s request of up to 24 years yet still the longest ever handed down in an insider trading case.
About 200 people had written on Rajaratnam’s behalf prior to his sentence issued last fall. The judge overseeing the case also noted Rajaratnam’s assistance to tsunami victims and others in need of aid when issuing the prison term.
If Judge Rakoff gives similar weight to Gupta’s good deeds, then he’s likely to issue a sentence far lower than what prosecutors have argued for. Considering the scope of Gupta’s crimes, however, a sentence with no jail time seems unlikely.