Steven Fortuna, a hedge-fund manager who pleaded guilty and agreed to assist a U.S. insider-trading probe of Galleon Group LLC, continues to provide information against others who haven’t been charged, a prosecutor said.
The cooperation of Fortuna, the co-founder and former managing director at S2 Capital in Boston who pleaded guilty to federal charges in 2009, “is ongoing,” Assistant U.S. Attorney Jonathan Streeter told U.S. District Judge Sidney Stein at a hearing today.
Stein inquired today whether Fortuna’s sentencing, which was postponed in February, could now go forward. Prosecutors had said his testimony might be needed at the trial of Galleon Group LLC co-founder Raj Rajaratnam. Fortuna didn’t testify against Rajaratnam, who was found guilty by a jury May 11 of all 14 counts against him in the largest illegal stock-tipping case in a generation.
“Mr. Fortuna’s cooperation was relevant to one of the defendants who has pled guilty,” Streeter said.
The U.S. has previously said Fortuna’s case was related to the prosecution of Rajaratnam’s co-defendant, Danielle Chiesi, a portfolio manager of New Castle Partners LLC who pleaded guilty to federal charges in January. The U.S. Securities and Exchange Commission said in a civil complaint against Chiesi that she passed inside information to Fortuna and Rajaratnam.
“There are other individuals he provided information about, that we’re still in the process of reviewing,” Streeter said today. “His cooperation is ongoing. We need to make the determination about other individuals who’ve not been charged.”
Stein gave Fortuna permission today to replace his lawyer. No reason was given for the change.
Fortuna’s new attorney, Michael Marino, a partner at Plourde Bogue Moylan & Marino LLP, told the judge he consented to the sentencing postponement. He declined to comment after court.
When Fortuna pleaded guilty in October 2009 to conspiracy and securities fraud, he said he was tipped to inside information by “several individuals” at other funds, according to a court transcript. He didn’t identify the tipsters.
“My criminal conduct relates to my participation in a conspiracy to commit securities fraud, with the assistance of several individuals at other hedge funds, and indirectly from technology companies,” he told Stein at the time.
Fortuna is one of 22 people who have pleaded guilty in the Galleon probe.
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).