(Updates with Ebbers, Rigas cases in the ninth paragraph.)
Oct. 12 (Bloomberg) -- Galleon Group LLC co-founder Raj Rajaratnam shouldn’t be granted bail pending appeal after he’s sentenced tomorrow for insider trading, prosecutors said, because he has millions of dollars and could flee the U.S.
Prosecutors said that Rajaratnam has failed to prove that he isn’t a flight risk and hasn’t refuted their argument that he has substantial ties outside the U.S., including Sri Lanka where he was born. Rajaratnam, 54, who is a naturalized U.S. citizen, also retains his Sri Lankan citizenship. He has also said that he “brought” all of his money to the U.S., prosecutors said.
While the government has said it opposes bail pending appeal, prosecutors also said today they have told his lawyers they won’t object if Rajaratnam surrenders shortly after his sentencing and goes directly to the facility to which he is designated by the U.S. Bureau of Prisons. Prosecutors said that prison authorities have informed them it will take 21 days for them to process his designation to a federal prison.
“Accordingly, should Rajaratnam flee to Sri Lanka or elsewhere, he would have access to tens of millions of dollars by the mere touch of a keystroke and thus could use that money to live abroad,” Assistant Manhattan U.S. Attorneys Jonathan Streeter, Reed Brodsky and Andrew Michaelson said.
Rajaratnam, who was convicted in May of 14 counts of securities fraud and conspiracy, is scheduled to be sentenced tomorrow before U.S. District Judge Richard Holwell in Manhattan.
Prosecutors, saying he made $72 million from his crimes, have asked for a prison term of 19 years and seven months to 24 1/2 years, which Rajaratnam’s lawyers called “grotesquely severe.” Defense lawyers said that he only made $7.4 million while trading at Galleon.
The government said today that Rajaratnam’s argument that federal wiretap statutes don’t authorize the use of wiretaps to intercept insider trading was “meritless,” and told Holwell that he has already ruled that the use of wiretaps were properly used against the fund manager.
Prosecutors said they won’t be able to extradite Rajaratnam if he fled to Sri Lanka and that in the 22 years that there has been a treaty between the U.S. and Sri Lanka, “not a single citizen of that country has been extradited by Sri Lanka to face prosecution.”
Rajaratnam has argued in court papers that he should remain free pending his appeal, citing several white collar defendants who were sentenced in federal court in New York, including WorldCom Inc. chairman Bernard Ebbers and Adelphia Communications Corp. founder John Rigas.
Ebbers and Rigas were permitted to remain free pending appeal. Ebbers was sentenced to 25 years in prison for an $11 billion fraud while Rigas was sentenced to serve 12 years in prison after being convicted of securities fraud for looting the company and lying about its finances.
Prosecutors said today that in Rigas’s case, U.S. District Judge Leonard Sand in New York found “unique” circumstances in the case to allow him to remain free until his conviction was upheld by a federal appeals court. In the case of Ebbers, prosecutors said all of his remaining cash had been taken by the U.S. and that he didn’t have strong ties abroad.
Kathryn Holmes Johnson, a spokeswoman for Rajaratnam’s lawyer John Dowd, declined to comment on the government’s filing.
The case is U.S. v. Rajaratnam, 09-01184, U.S. District Court, Southern District of New York (Manhattan).
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