Bloomberg News

U.S. Wants Rajaratnam Medical Information Made Public

September 29, 2011

(Adds U.S. sentencing request in fifth paragraph.)

Sept. 29 (Bloomberg) -- Federal prosecutors asked a judge to unseal medical information that Raj Rajaratnam, the hedge fund manager convicted of directing a massive insider trading ring, is using to argue for a reduced sentence.

The public has a constitutional right to view the documents because Rajaratnam is using them to support his argument for leniency, prosecutors told U.S. District Judge Richard Holwell today in a court filing in Manhattan.

“While individuals have a right to medical privacy, Rajaratnam waived such rights, at least in part, by arguing that his medical conditions justify departing or varying from the sentencing guidelines,” prosecutors said in the filing. “The public has a First Amendment right to see the arguments and declarations that both parties submitted to this court about the impact of his medical condition on sentencing.”

Rajaratnam, 54, was convicted in May on all 14 criminal counts against him. Prosecutors said he gained $63.8 million by trading with inside information in 11 stocks, including Goldman Sachs Group Inc., Intel Corp., Google Inc., ATI Technologies Inc. and Clearwire Corp.

Prosecutors have asked Holwell to give Rajaratnam, the co- founder of Galleon Group LLC, from 19 1/2 to 24 1/2 years in prison. Rajaratnam’s lawyers, calling the government’s proposal “grotesquely severe,” asked Holwell for a sentence “substantially below” that. Rajaratnam is scheduled to be sentenced Oct. 13.

Terence Lynam, a lawyer for Rajaratnam, declined to comment on his client’s medical condition or on the government’s court filing. Rajaratnam hasn’t disclosed the nature of any illnesses he’s using to argue for a lower sentence.

Request to Unseal

In their request today, prosecutors asked Holwell to make public a letter Rajaratnam’s lawyers sent to him arguing for leniency based on his medical condition, a doctor’s declaration describing Rajaratnam’s illnesses, declarations from the director of a non-profit criminal justice organization and a former Bureau of Prisons employee and two letters from Rajaratnam’s doctors to the judge. Prosecutors are also seeking to unseal a declaration they filed by a doctor for the U.S. Bureau of Prisons and two declarations sent by Rajaratnam in response.

In the filing, Assistant U.S. Attorneys Jonathan Streeter, Reed Brodsky and Andrew Michaelson argued that the Bureau of Prisons can provide Rajaratnam with adequate medical care, that he committed most of his crimes after he knew of his medical condition and that the case requires a significant sentence “regardless of Rajaratnam’s medical condition.”

No Reduction

They also argued that if Holwell takes Rajaratnam’s condition into account in sentencing, the judge should make public “the general nature of his medical conditions and his long-term prognosis.”

In its court papers, the government cited various criminal defendants who were found by other federal judges not to merit reduced sentences because they had diseases and medical conditions, including cancer, heart conditions and even a brain aneurism.

“Rajaratnam’s medical conditions are no more private or embarrassing than the conditions discussed in the cases upon which he relies,” prosecutors said.

The U.S. noted that Mark Kurland, 71, co-founder of New Castle Funds and a co-defendant convicted of insider trading in the Galleon probe, suffered from prostate cancer, diabetes and other maladies. U.S. District Judge Victor Marrero rejected his request for a downward departure based on these health issues, the prosecutors said.

‘Serious Problems’

In a sentencing memorandum filed with Holwell Aug. 9, Rajaratnam’s lawyers argued the judge should consider unspecified “serious medical problems present to an unusual degree.”

“As the court is aware from the confidential information submitted to the probation officer, Mr. Rajaratnam faces several significant and challenging medical issues at the present time, which are expected to worsen in the near future,” his lawyers wrote. “The Bureau of Prisons will simply not be able to manage these issues and provide the care that Mr. Rajaratnam requires. Any term of incarceration would seriously threaten his well-being and be life-threatening.”

During jury deliberations in the trial, Holwell excused Rajaratnam from the court during part of jury deliberations, without disclosing any reason for his absence. Rajaratnam’s lawyers later released a statement saying he had emergency foot surgery to treat a bacterial infection.

The court docket in Rajaratnam’s case shows Holwell sealed at least 38 documents filed with the court. He also sealed some of the hearings and court transcripts in the case. During jury deliberations, Holwell held secret hearings relating to Rajaratnam’s foot surgery, during which he spoke with the defendant on the phone, and to his decision to excuse a juror who said she had to leave the panel for medical reasons.

The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).

--With assistance from David Glovin in New York. Editors: Stephen Farr, Mary Romano

To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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