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White collar convict likely to control personal finances while in prison

White collar convict likely to control personal finances while in prison

Two weeks ago a federal jury in Manhattan convicted Raj Rajaratnam, the founder of Galleon Group, ofwhite collar crime. The hedge fund founder faces sentencing for 14 counts of securities fraud and conspiracy and faces millions of dollars in fines as well. Rajaratnam in 2009 was worth $1.3 billion and is expected to remain a wealthy individual after the payment of legal defense fees and criminal penalties.

Though Rajaratnam’s current worth is not known, his current wealth was demonstrated by his ability to fund a multi-million dollar defense case. An example of the cost of Rajaratnam’s legal defense was a defense witness who was paid $200,000 to analyze Rajaratnam’s trades. The 53-year-old hedge fund founder faces a potential criminal penalty of $172. 6 million for illegal gains on stocks like Goldman Sachs and Google. He also faces a $5 million criminal fine for each of the nine security fraud counts. In addition, he could face civil fines that stem from a Securities and Exchange Commission case that has not been concluded.

Rajaratnam has a family of three children and if any funds are leftover after legal fees and penalties are assessed, the amount could go to his family. Though Rajaratnam would not be able to run a business while in prison, it is expected that he would be able to handle his personal finances from prison after the payment of criminal penalties. The hedge fund founder could face a 15-1/2 to 19-1/2 year prison sentence and would have to serve 85 percent of the sentence since parole is not allowed in the federal prison system.

Source:¬†Reuters,¬†“Rajaratnam may stay rich even if he goes to prison,”¬†Jonathan Stempel, 5/12/11

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