New York: US prosecutors have sought 8 to 10 years in jail for Indian-American former Goldman Sachs director Rajat Gupta for his "shocking" insider trading crimes even as he pleaded to be spared a prison term and offered to perform "rigorous full-time" community service.
Prosecutors and the former McKinsey head's defence team each submitted their sentencing memorandum in US District Court here yesterday, before US District Judge Jed Rakoff sentences Gupta on insider trading charges on October 24.
In a 12-page memorandum, India-born US Attorney in Manhattan Preet Bharara said a "sentence within the applicable guidelines range of 97 to 121 months imprisonment is appropriate" for Gupta, 63, who repeatedly flouted the law and abused his position of trust and in his "callousness and above-the-law arrogance" committed crimes which were "extraordinarily serious and damaging to the capital markets".
"Gupta's crimes are shocking," Bharara said arguing that, "a significant term of imprisonment is necessary to reflect the seriousness of Gupta's crimes and to deter other corporate insiders in similar positions of trust from stealing corporate secrets and engaging in a crime that has become far too common."
Prosecutors said Goldman Sachs, which was "an identifiable victim of Gupta's criminal conduct," is seeking restitution to the amount of USD 6.8 million, including the fees the company incurred in the course of investigations and legal proceedings as well as a portion of the compensation that Goldman paid to Gupta as a director.
They said Gupta should also forfeit USD 1,150,000, which is 10 percent of the trading gains hedge fund founder Raj Rajaratnam made as a result of Gupta's illegal tips to him.
In his sentencing memorandum, Gupta's lawyer Gary Naftalis sought probation and said his client is ready to perform a "rigorous full-time programme of community service".
Naftalis said while Gupta is prepared to undertake any community service the court considers appropriate, he offered two specific programmes that Gupta could undertake.
Naftalis said Gupta could work with Covenant House, which provides emergency shelter and other services for homeless, runaway and at risk youth.
"Gupta would provide direct services to these children at Covenant House's New York site, including working as part of the intake team at the Crisis Centre, and assisting participants in the transitional living programme known as 'Rights of Passage' and in job training.
"In addition, he would assist Covenant House in developing a plan to implement a set of strategic initiatives for the organisation," Naftalis said.
The second offer for community services involves Gupta living in the rural districts of Rwanda and working with government officials and humanitarian organisation 'CARE USA' to help implement the country's initiative to improve delivery of health care and agricultural development.
Naftalis said Gupta's "once sterling reputation, built over decades, has been irreparably shattered, and his business and philanthropic accomplishments tainted".
Gupta's "monumental fall" is itself severe punishment and courts have previously recognised that "if used wisely, probation is sufficiently serious punishment to satisfy the statutory mandate that the sentence reflect the seriousness of the offense and provide just punishment".
Gupta is the most high profile Wall Street executive to be convicted in the government's crackdown on insider trading.
Rajaratnam is currently serving an 11 year prison term after bing convicted last year.
Prosecutors argued that while Gupta's criminal conduct appears to be a deviation from an otherwise law-abiding life, his crimes were not an isolated occurrence or a momentary lapse in judgement.
"Indeed, the opposite is true. Gupta repeatedly tipped Rajaratnam with corporate secrets for nearly two years. And the ease with which he disclosed confidential information to Rajaratnam...Reflects the total disregard he showed for his fiduciary duties and the callousness with which he handled confidential information," the prosecutors argued.
Gupta was found guilty by a jury in June this year on three counts of securities fraud and one count of conspiracy.