Rajat Gupta to seek probation from sensitive judge

As a lawyer, Jed Rakoff once persuaded a judge to give probation to a client convicted at an insider trading trial alongside former Wall Street Journal reporter R Foster Winans. Now, a federal judge himself, Rakoff must weigh Rajat Gupta’s similar request to stay out of prison.

Gupta, a former Goldman Sachs Group director, will come before Rakoff in Manhattan federal court on October 24 to be sentenced for leaking stock tips to Galleon Group co-founder Raj Rajaratnam. Prosecutors say Gupta, convicted by a jury in June, deserves 10 years in prison.

Gary Naftalis, a lawyer for Gupta , argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service , suggesting Gupta work with troubled youth in New York or with the poor in Rwanda. “Good works help, but on their own they are rarely a ‘Get out of jail free card,’” said Gordon Mehler, a former federal prosecutor who’s now in private practice in New York.

“So, it seems as if probation, even in Rwanda , is unlikely.” In his 17 years as a judge, Rakoff has sentenced at least nine defendants for insider trading, including seven who pleaded guilty and two whom he jailed after they were found guilty by juries. Rakoff has a track record of imposing a sentence that is half what the government recommends.

“If there is any judge who’s sensitive to the draconian impact of the sentencing guidelines with respect to white-collar offenders, it’s Judge Rakoff,” said J Bruce Maffeo, a former federal prosecutor now in private practice. “He’s also equally sensitive to the need to fashion a sentence that takes into account both the defendant’s personal background and the need to deter others in the financial world, where this kind of activity appears to be more prevalent than previously assumed.”