Ali Far, a former Galleon Group LLC fund manager, was spared a prison sentence after giving prosecutors “substantial assistance” by secretly recording conversations with the fund’s co-founder Raj Rajaratnam and three other insider traders.
Far, 51, who worked for Rajaratnam from 1999 to 2007 and left Galleon to start Spherix Capital LLC with Richard Choo-Beng Lee, was sentenced yesterday to one year of probation. He agreed to cooperate with the government’s then-covert probe of Galleon after he and Lee were approached by Federal Bureau of Investigation agents in April 2009. Lee also pleaded guilty and is cooperating with the U.S. He hasn’t been sentenced.
Far worked covertly for six months for the U.S., recording at the direction of the FBI about 244 phone calls, Assistant U.S. Attorney Reed Brodsky told U.S. District Judge Robert Patterson in Manhattan yesterday. Far’s cooperation continued for three and a half more years, his lawyer, Andrew Lourie, said.
“The defendant was instrumental in Mr. Rajaratnam’s conviction and it’s vital to get credit for that,” Patterson said. “I’m going to take into account that for all intents and purposes, the defendant has been in probation for the last four years when he has had to report to the U.S.”
The judge fined Far $100,000 and ordered him to perform 100 days of community service. At the request of prosecutors, Far was instructed to continue cooperating with the government. Far had already agreed to forfeit $667,000 in illicit profit from his insider trading, Lourie told the judge.
“We all have to learn from our mistakes; you did the right thing here, Mr. Far,” Patterson said. “Good luck to you.”
With his voice choking with emotion, Far apologized to the court and his wife and children for his crimes.
“I’m truly sorry for my mistakes and I’m ashamed,” Far said. “While I can’t change the past, I promise that I’ll do what I can to make up for it.”
More than 70 people have been charged and convicted with insider trading since August 2009 as part of a nationwide crackdown by the office of Manhattan U.S. Attorney Preet Bharara and the FBI in New York.
Far, who was born in Iran and came to the U.S. as a teenager, “proactively” aided the government’s covert investigation from April to October 2009, when Rajaratnam and others were arrested, Brodsky said yesterday.
Far’s recorded calls to Rajaratnam enabled the government to keep tabs on Rajaratnam’s whereabouts before his arrest, Brodsky wrote in court papers.
During Rajaratnam’s 2011 trial, Anil Kumar, a former McKinsey & Co. partner who pleaded guilty to passing illegal tips to the fund manager, said Rajaratnam had confided in him in 2009 that he believed the government was wiretapping him.
“You know Anil, I’m really disappointed, I’m told there’s a gentleman who used to work for me who is now wearing a wire,” Kumar testified. Kumar said Rajaratnam identified the informant as Far.
Far also helped the government’s probe of Ali Hariri, a family friend who was a former Atheros Communications Inc. vice president, and Adam Smith, a former Galleon trader, Brodsky said. Both Hariri and Smith pleaded guilty and agreed to cooperate with the U.S., Brodsky said.
Far helped the government build cases against Mark Anthony Longoria, a former Advanced Micro Devices Inc. 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.
Brodsky said yesterday that Far also helped the U.S. and its investigation of Primary Global Research LLC, an expert-networking firm based in Mountain View, California, which linked hedge fund managers investors with industry experts at public companies.
Far’s information helped the U.S. obtain a court-authorized wiretap on a PGR telephone conference line as well as help make a case against James Fleishman, a former PGR executive, who was later convicted after trial in 2011, Brodsky 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.
“We’re happy the judge saw fit to sentence him to probation,” Far’s lawyer, Lourie, said after court.
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).