Ali Far, a former Galleon Group LLC fund manager, provided “substantial assistance” by secretly recording conversations with to the fund’s co-founder Raj Rajaratnam and three other insider traders, prosecutors said.
Far, who worked for Rajaratnam from 1999 to 2007, left Galleon to start Spherix Capital LLC with Richard Choo-Beng Lee, prosecutors said. During his time at both funds, Far solicited illegal tips from inside sources.
Both Far and Lee were approached by agents with the Federal Bureau of Investigation in April 2009 and agreed to secretly cooperate in the government’s then-covert probe of Galleon, Assistant U.S. Attorney Reed Brodsky said in a memo to the court. Far is scheduled to be sentenced Feb. 11 by U.S. District Judge Robert Patterson in Manhattan.
Far “proactively” aided the government’s covert investigation from April to October 2009, when Rajaratnam and others were arrested as part of the Galleon probe, Brodsky said.
“During this six-month period, Far secretly recorded, at the direction of the FBI, about 244 phone calls to help the government’s investigation,” the prosecutor wrote. “Among other things, Far placed consensually recorded calls with Rajaratnam that enabled the government to keep tabs on Rajaratnam’s whereabouts (prior to Rajaratnam’s arrest).”
Far, who agreed to cooperate with the U.S. in April 2009, helped the U.S. bring cases against Rajaratnam, Ali Hariri, a family friend who was a former Atheros Communications Inc. vice president, and Adam Smith, a former Galleon trader, Brodsky said the memo. Hariri and Smith pleaded guilty and agreed to cooperate with the U.S., Brodsky said.
He also provided prosecutors and FBI agents with information about insider trading tied to the expert networking firm Primary Global Research LLC, Brodsky said.
He helped the government build cases against Mark Anthony Longoria, a former Advanced Micro Devices Inc. (AMD) employee, and Jason Pflaum, a former analyst with Barai Capital Management LP. Longoria and Pflaum have pleaded guilty and agreed to cooperate, the U.S. said.
Far pleaded guilty to conspiracy and securities fraud on Oct. 19, 2009. Securities fraud carries a maximum prison term of 20 years in prison while conspiracy carries a term of five years’ imprisonment.
His defense lawyer, Steven Kobre, didn’t immediately return a call seeking comment about his client’s sentencing.
Prosecutors today also said they are seeking sentencing leniency for Steven Fortuna, a hedge-fund manager who helped authorities convict two other insider trading defendants tied to the Galleon investigation.
Fortuna, a cofounder of S2 Capital LLC, wore a wire to record more than 400 conversations with six former friends and colleagues who were targets of the government’s crackdown on insider trading at hedge funds, Assistant U.S. Attorney Antonia Apps said in a letter today to U.S. District Judge Sidney Stein in New York.
Fortuna’s cooperation helped lead to a guilty plea from Danielle Chiesi, a former New Castle Partners portfolio manager, Apps said in the letter. Chiesi was sentenced in 2011 to 30 months in prison after pleading guilty to passing illegal tips to Fortuna, Rajaratnam and others.
Fortuna also helped prosecutors win a guilty plea from Robert Moffat, a former International Business Machines Corp. (IBM) executive, according to Apps. Moffat admitted he passed tips about IBM and other companies to Chiesi, with whom he was having an affair. He was sentenced to six months in prison.
Apps said Fortuna also assisted the government in continuing investigations, the details of which were redacted from the public version her letter.
Fortuna pleaded guilty in 2009 to three counts of conspiracy, each of which carries a maximum penalty of five years in prison, and one count of securities fraud, which carries a 20-year maximum. Fortuna is scheduled to be sentenced Feb. 13 by U.S. District Judge Sidney Stein, according to court documents.
Fortuna’s lawyer, Francis Dimento, declined to comment on his client’s sentencing.
More than 70 people have been charged and convicted with insider trading since August 2009 as part of a nationwide crackdown by Bharara’s office and the FBI in New York.
The cases are U.S. v. Far, 09-cr-1009, U.S. District Court, Southern District of New York (Manhattan) U.S. v. Fortuna 09- cr-1003, Southern District of New York (Manhattan).
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