Rajat Gupta's judge has track record of showing leniency in insider cases

NEW YORK: The judge who will sentence former Goldman Sachs Group Inc Director Rajat Gupta for insider trading has a track record of cutting the government's recommended punishment in some cases by half or more.

US District Judge Jed Rakoff in Manhattan is to sentence Gupta, once a managing partner of McKinsey & Co, for tipping Galleon Group LLC co-founder Raj Rajaratnam.

In September, the judge sentenced Winifred Jiau, a Stanford University-educated consultant convicted of corrupting friends and selling confidential information, to four years in prison, less than half of the maximum 10 years sought by federal prosecutors.

Two of her colleagues got probation from Rakoff instead of jail. Gupta, 63, faces a maximum 20-year term for securities fraud at his Oct 18 sentencing, the most serious count he was convicted of last week.

"I suspect he'll come in a little lower than in the Jiau case," said Peter Henning, a professor at Wayne State University Law School in Detroit who predicted prosecutors will seek a sentence for Gupta of between eight and 10 years, slightly less than the 11 years Rajaratnam received.

Henning said Rakoff will sentence Gupta to three years in prison- one reason being that Gupta has a much greater history of charity than Jiau, a point "that seems to be persuasive to judges," he said.

The Jiau sentence came as a surprise after Rakoff initially appeared to agree with the government's recommendation last fall.

"There are certain things the court can't ignore," the judge said. "This was a serious crime, going to the integrity of the financial markets, engaged in for a period of up to two years. That alone requires some meaningful sentence." Yet minutes later, Rakoff criticized the advisory federal sentencing guidelines, deriding them as "the mirage of something that can be obtained with arithmetic certainty."

Rakoff's ultimate sentence for Jiau was below the term of 78 to 97 months suggested by federal guidelines. Others convicted in the government's insider trading probe, such as former Primary Global Research LLC executive James Fleishman, received a 30-month term instead of as many as 108 months sought by the US Former SAC Capital Advisors LP manager Donald Longueuil also received a 30-month term instead of the 46-57 months sought by the prosecution; and Rakoff sentenced Manosha Karunatilaka, a former Taiwan Semiconductor Manufacturing Co manager, to 18 months in prison while the US sought a term of 37 to 46 months.
In a 2006 opinion, which has been cited by defense attorneys seeking leniency for clients, Rakoff called the prosecutor's request for an 85-year sentence in an accounting fraud case "patently unreasonable" and "absurd."

After the government proposed 15 years instead, Rakoff ordered Richard Abelson, the former president of Impath Inc, to serve 42 months in prison, a sentence Rakoff called "fair, just and reasonable."