Michael Cardillo, the ex-Galleon Group LLC portfolio manager who was the first person to tell the U.S. that former Goldman Sachs Group Inc. (GS:US) Director Rajat Gupta was a source of illegal tips for Raj Rajaratnam, was sentenced to three years of probation.
Cardillo, who pleaded guilty to insider-trading charges in January 2011, provided “extraordinary” help in cases against Gupta and former Galleon trader Zvi Goffer, Assistant U.S. Attorney Reed Brodsky told U.S. District Judge Jed Rakoff in Manhattan, who imposed the sentence yesterday.
He was the first person to inform the government about how Gupta, who was also a former director of Procter & Gamble (PG:US) Co., supplied inside information to Rajaratnam, the co-founder of Galleon, Brodsky said.
“He provided us with insights within Galleon which otherwise, we couldn’t get,” Brodsky told the judge. “It was Mr. Cardillo who first raised Procter & Gamble and that accelerated the government’s investigation of Mr. Gupta. His information provided enormous corroboration from the government’s point of view that Mr. Gupta was the one who’d breached his duties and tipped Mr. Rajaratnam.”
Rakoff sentenced Gupta yesterday to two years in prison after a jury convicted him in June of three counts of securities fraud and one count of conspiracy.
Alnoor Ebrahim, a former AT&T Inc. (T:US) employee had offered to help prosecutors investigating insider trading, was sentenced yesterday to a year and a day in prison for passing inside information about the company and suppliers including Apple Inc. and Research In Motion Ltd. to the clients of an expert- networking firm.
Ebrahim, 58, a naturalized U.S. citizen who was born in Tanzania, pleaded guilty in June to a single count of conspiracy to commit wire fraud and securities fraud.
He admitted accepting more than $180,000 from Primary Global Research LLC, an expert-networking firm, and passing information about AT&T’s sales of the Apple iPhone and RIM’s BlackBerry products, as well as handsets sold through AT&T’s distribution channel.
“I’m very, very sorry for breaching their trust in me,” said Ebrahim, who apologized to his family, friends, colleagues and AT&T before the judge imposed his sentence.
“I take full responsibility for my actions and I will have to live with this for the rest of my life,” he said. “I stand before you asking for leniency and compassion.”
While Ebrahim faced a term of 18 to 24 months in prison, U.S. District Judge Paul Oetken said he was crediting the defendant with agreeing to plead guilty and offering to cooperate with the U.S. He also said that he felt a term of imprisonment was warranted to deter others from committing insider trading.
Cardillo testified at Gupta’s trial and at another trial against Goffer, his brother, Emanuel Goffer, and trader Michael Kimelman. The Goffers and Kimelman were convicted after trial last year and have all been sentenced to prison.
Cardillo’s lawyer, Marjorie Peerce, told the judge yesterday that her client agreed to cooperate with the U.S. within hours of being approached by agents with the Federal Bureau of Investigation. Five days later, he told prosecutors what he knew about Galleon trading activities, she said.
“I am truly sorry for the conduct I committed, your honor,” Cardillo said before the sentence was imposed. “I’m looking forward to moving forward as a law-abiding and good member of society.”
Rakoff said he would credit Cardillo’s assistance to the government in the Gupta case.
“Mr. Cardillo is essentially a decent person,” the judge said.
“When you address the truly extraordinary cooperation that the government has detailed, it’s hard to imagine a situation where he would not be entitled to no jail time,” Rakoff said.
Rakoff ordered Cardillo to forfeit $66,700 and said he wouldn’t impose any fine or restitution.
Cardillo declined to comment after court.
“Mr. Cardillo looks forward to living out the rest of his life as a law-abiding and productive member of society,” Peerce said.
The case is U.S. v. Cardillo, 11-cr-907, U.S. District Court, Southern District of New York (Manhattan). Ebrahim’s case is U.S. v. Ebrahim, 12-cr-471, U.S. District Court, Southern District of New York (Manhattan).
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