(Updates with Kimelman statement in third paragraph.)
Oct. 12 (Bloomberg) -- Michael Kimelman, the Incremental Capital LLC co-founder, was sentenced to 2 1/2 years in prison for insider trading, a day before Galleon Group LLC’s Raj Rajaratnam is set to learn his fate in the same Manhattan courthouse.
Kimelman was found guilty in June with Zvi Goffer, a former Galleon employee, and his brother, Emanuel Goffer, in a scheme to bribe two lawyers at Boston-based Ropes & Gray LLP for secret information about transactions involving 3Com Corp., Axcan Pharma Inc., Kronos Inc. and Hilton Hotels Corp.
“I was made aware when I went to trial that I could be convicted,” Kimelman told U.S. District Judge Richard Sullivan. “Now that has happened, I am ready to pay the price and face the consequences of my decision.”
Sullivan today also ordered Kimelman to serve three years of supervised release and ordered him to forfeit $289,000, the amount prosecutors said he made from the scheme. In September, Sullivan gave Zvi Goffer 10 years in prison, and last week he sentenced Emanuel Goffer to three years.
Kimelman has continued to claim he is innocent and intends to appeal the conviction. Last week Sullivan denied his requests for acquittal or for a new trial.
Request for Leniency
Kimelman’s lawyer, Michael Sommer, asked Sullivan for leniency, arguing that his client never used a prepaid cell phone to evade detection, as others in the ring did. Kimelman never took or gave any bribes, wasn’t a leader of the scheme and didn’t pass any tips to others, Sommer said.
Assistant U.S. Attorney Richard Tarlowe urged Sullivan to sentence Kimelman within the advisory federal guideline range of 33 months to 41 months. He said Kimelman created a phony paper trail to disguise the insider trades.
Sullivan said he was influenced in his decision to sentence Kimelman below the guideline range by the more than 100 letters he received from Kimelman’s friends and family.
Rajaratnam, the convicted mastermind of the central scheme uncovered in a government crackdown on insider trading at hedge funds, is scheduled to be sentenced tomorrow by U.S. District Judge Richard Holwell. He was convicted by a jury in May of 14 counts of securities fraud and conspiracy.
Rajaratnam, 54, was accused of using illegal tips to trade in stocks of companies including Goldman Sachs Group Inc., Intel Corp., Google Inc., ATI Technologies Inc. and Clearwire Corp. Prosecutors said he made $72 million from his crimes.
The case is U.S. v. Goffer, 10-cr-00056, U.S. District Court, Southern District of New York (Manhattan).
--With assistance from Patricia Hurtado in Manhattan federal court. Editors: Peter Blumberg, Mary Romano
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