Rajat Gupta goes to prison, may be out by 2015-end

Written By Unknown on Rabu, 18 Juni 2014 | 22.23

WASHINGTON: Celebrated Indian-American business icon Rajat Gupta is reporting to a Massachusetts prison at noon on Tuesday to begin a two-year sentence for insider trading, having exhausted every court of appeal in a case that has transfixed corporate board rooms in US and India and beyond.

When Gupta, 65, drives up to the minimum security satellite camp of the Federal Medical Center-Devens in Ayer, Massachusetts, he would have spent more time (almost three years) fighting the case than he will spend inside prison. The IIT and Harvard alumnus, a former director at McKinsey, Goldman Sachs and other storied firms, is expected to serve approximately 85% of his 24-month sentence but he will be eligible for transfer to a halfway house prior to his release date. The expectation is that he will be back home by the end of 2015.

READ ALSO: $14 million civil penalty too high, Rajat Gupta tells US appeals court

Still, it is a devastating blow to illustrious corporate honcho who counted the high and mighty of India and US, including the Clintons, among his friends. But when the long arm of the law, represented among others by New York Southern District Attorney Preet Bharara, reached out, no connection could save him from jail time.

Gupta fought and appealed the case against him every inch of the way, going all the way up to the US Supreme Court, and by some accounts spending as much as $50 million in legal fees and associated costs. Not only were his appeals rebuffed, but the courts also docked him for nearly $25 million in criminal fines and civil penalties, levies that his lawyers are still appealing against.

READ ALSO: Former Goldman Sachs director Rajat Gupta penning book to tell his story

Gupta, whose net worth was once estimated at around $130 million, is fighting to save from forfeiture his many properties, including a waterfront home in Westport, Connecticut that once belonged to the co-founder of J C Penney that he bought for more than $6 million. Legal stratagems include moving his domicile to Florida, which has more lenient bankruptcy laws that protect personal property.

Ironically, Gupta is being sent to a prison that has as its inmate Raj Rajaratnam, founder of the New York hedge fund Galleon Group, the man to whom he was convicted of giving insider information on a raft of companies including Goldman Sachs. The Sri Lanka born Rajaratnam, who is serving a 11-year sentence, is a diabetic and is at the FMC Devens' medical unit because he has to undergo dialysis. Gupta himself will undergo a medical check-up soon after reporting at the prison before he is lodged in the satellite camp, which reportedly has some 130 inmates.

Over the past few weeks, Gupta is reported to have spent time with his family, including going on short holidays with his four daughters, in anticipation of serving his sentence. However, prison guidelines will enable them to visit him on Fridays between 2:30 pm and 8:30 pm and on Saturdays, Sundays and federal holidays between 8:30 am to 3:00 pm.

Rajat Gupta with Ratan Tata (File photo)

One of IIT's best known graduates, Gupta is said to be writing a book about his ordeal and also planning a visit to India as soon as he is released from prison, according to Anita Raghavan, author of "The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund," a book about the white collar case that rocked Wall Street and corporate America.

"Gupta will have no trouble lining up consulting assignments from Indian companies. But his sterling calling card - offering Indian executives unparalleled access to American chief executives and politicians - will be badly tarnished," Raghavan wrote in NYT's Dealbook last week.

http://timesofindia.indiatimes.com/followceleb.cms?alias=US Securities and Exchange Commission,Rajat Gupta Prison,Rajat Gupta Fine Appeal,Rajat Gupta,Raj Rajaratnam

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