U.S. seeks up to 10 year prison sentence in Gupta insider case

Wed Oct 17, 2012 5:43pm EDT
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By Basil Katz

NEW YORK (Reuters) - Former Goldman Sachs Group Inc board member Rajat Gupta deserves to spend eight to 10 years in prison for his "shocking" insider-trading crimes, U.S. prosecutors said in court papers on Wednesday.

Gupta, who is also a former head of management consultancy McKinsey & Co, is set to be sentenced on October 24 in U.S. District Court in Manhattan. He was found guilty in June of leaking Goldman boardroom secrets to his hedge fund friend Raj Rajaratnam, who is now serving an 11-year prison term for insider trading.

Gupta, 63, is the most influential corporate figure to be caught in a broad insider trading crackdown of the last four years. His lawyers on Wednesday filed court papers asking he be spared prison, citing his years of charitable works, and suggested he be ordered to probation and community service instead.

The government said Gupta should get a significant prison term, saying his "crimes are shocking" and he time and time again flouted the law and abused his position of trust as a corporate board member.

"Although Gupta's criminal conduct appears to represent a deviation from an otherwise law-abiding life, Gupta's crimes were not an isolated occurrence or a momentary lapse in judgment," Assistant U.S. Attorney Richard Tarlowe wrote in the government's filing. "Indeed, the opposite is true."

Prosecutors also said that Goldman is seeking $6.8 million in restitution for legal fees and related costs it paid related to the Gupta case. About 25 percent of that amount is compensation that Goldman paid to Gupta as a director, a court filing said.

A spokesman for Goldman Sachs, Michael DuVally, declined to comment.

Christopher Mumma, a spokesman for Gupta's attorneys, declined to comment.   Continued...

Former Goldman Sachs Group Inc board member Rajat Gupta leaves Manhattan Federal Court following a guilty verdict in his trial in New York June 15, 2012. REUTERS/Lucas Jackson