Chiesi Swaps Cell for Halfway House After Insider Scandal
Chiesi, who did a 15-month stint at a West Virginia prison camp for passing illegal stock tips to hedge-fund manager Raj Rajaratnam, returned in January to New York City and has been living at a federal halfway house in the north Bronx.
“It’s good to be back,” a svelte Chiesi, wearing a white sleeveless peplum top, jeans and pink and white scarf, said May 16 as she left a residence she shares with other newly freed prisoners. “I feel good. I feel great.”
Chiesi, giving her first post-prison interview, is one of more than 70 stock traders, analysts, lawyers and executives who have been convicted of insider trading since August 2009. The former teenage beauty queen, who once showed up at technology conferences wearing form-fitting clothes and low-cut tops, is among the most flamboyant defendants to be ensnared in the sweeping federal crackdown.
The probe initially centered on Rajaratnam, the Galleon Group LLC co-founder who was convicted in 2011 of conspiracy after an eight-week trial. The Sri Lankan-born money manager, who allegedly earned at least $45 million on tips from corporate insiders, is serving an 11-year prison sentence.
At Rajaratnam’s trial, prosecutors played wiretapped recordings of his conversations with Chiesi, who worked as an analyst at New Castle Funds LLC in New York. In one, they speculated why another trader bought 1 million shares of Advanced Micro Devices Inc. (AMD) before the public disclosure of a transaction between Sunnyvale, California-based AMD and Abu Dhabi’s Mubadala Development Co. Prosecutors said they had a tip.
“That’s a very bold move to make,” Chiesi said on the recording. “Do you think somebody knows what we know?”
Chiesi pleaded guilty to conspiracy before the trial and went to prison in October 2011. In her guilty plea, she admitted that she solicited inside tips from technology industry executives. Among them was Robert Moffat, a former International Business Machines Corp. executive with whom she had an intimate relationship, he said in his guilty plea. Moffat got a six-month sentence.
“I was complicit,” Chiesi said in the May 16 interview.
Chiesi did her time in Alderson, West Virginia, at a minimum-security camp in the foothills of the Allegheny Mountains. Martha Stewart was once jailed there for lying to authorities about her sale of stocks.
Chiesi’s home was an 8-foot by 10-foot cubicle. Her cellmate was doing time for a drug offense, as were many at the prison. She spoke to family on brief phone calls and tutored other inmates in math. She went running and tried to exercise in a sparse gym that lacked weights.
Chiesi said she earned respect from fellow inmates because she hadn’t cooperated with prosecutors.
“Not being a rat works,” she said.
“I didn’t talk, I didn’t speak, I kept to myself,” Chiesi said of a term she described as “very difficult.” Her cellmate was “an inspiration” who “really helped me get through.”
Chiesi left Alderson in early January after shaving time off her sentence for good behavior and participation in a drug and alcohol program. She headed for the community-based “re-entry” program in the Bronx, where she’ll spend six months before returning to an apartment in Manhattan.
“When my family picked me up, you cannot even believe the feeling,” Chiesi said. “I had my mom, my brother, my sister, my nieces. They drove outside of the Alderson gates, and I jumped out of the car. It was surreal.”
“All I could say was, ‘I did it,’” she said.
Now Chiesi is living on a tree-lined Bronx street that’s a far cry from the tony midtown Manhattan neighborhood that was once home. She has a room in a five-story facility housing men and women which is staffed by security officers guarding the entrance. Nearby are shuttered storefronts and a jeans shop selling $6 tank tops.
Chiesi, who is working for her brother in a job she declined to identify, comes and goes without an escort.
“Life is hard,” she said. “I didn’t come back to something that’s perfect.”
At her sentencing, Chiesi’s lawyers argued that her former boss, Mark Kurland, co-founder of New Castle Funds, had used their “toxic” sexual relationship to manipulate her into feeding him tips. In the May 16 interview, Chiesi asked about Kurland, who was sentenced to 27 months in the case.
“I want to know what Mark Kurland is doing now,” she said.
Chiesi’s lawyer, Don Buchwald, said in an interview on May 16 that Chiesi must serve an additional two years on supervised release, a form of probation, after she leaves the halfway house.
Chiesi says she’s resilient and is eager to move on with her life.
“I don’t have a career anymore, but I have drive and ambition, and I will make it work,” she said. “I’m back.”
The case is U.S. v. Rajaratnam, 09-cr-1184, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org