 "Rajat Gupta's last days of freedom")
On Tuesday, Rajat K Gupta (pictured), the former managing director of the consulting firm McKinsey & Company who was convicted of insider trading, is scheduled to report to a minimum-security prison camp in Massachusetts, spending the next two years not far from his one-time friend and partner in crime, Raj Rajaratnam.
A federal judge, at the request of Gupta's lawyer, had recommended that Gupta be sent to a prison in Otisville, NY, but Gupta has been assigned to the satellite camp at FMC Devens in Ayer, Massachusetts, 40 miles northwest of Boston.
In an interesting twist, Rajaratnam, the man to whom Gupta was convicted of giving corporate secrets on a raft of companies, including Goldman Sachs, is in FMC Devens' federal medical centre. Rajaratnam, the founder of New York hedge fund Galleon Group, is a diabetic and FMC Devens' medical unit provides dialysis. His facility is next to the satellite camp where Gupta will be.
One of the differences between the two prisons is that Rajaratnam has slightly longer visiting hours. On Fridays, he can mix with friends and family from 8:30 a.m. to 3 pm; Gupta can receive guests only from 2:30 pm to 8:30 pm.
Gupta's effort to put off his two-year sentence ended this week when the Supreme Court rejected a request for a delay.
Since a federal jury in Manhattan found him guilty two years ago, Gupta has been putting his financial house in order, part of which involves paying regular visits to his villa in the Palm Island Resort in southwest Florida. The villa is also his legal residence.
For Gupta, his place of abode is not an academic question; it may be crucial to his financial future. In the event that his legal appeals are exhausted and he is forced as a result to pay the legal costs for his defence, he will be able to shield his home, regardless of its value, in any bankruptcy court proceeding if he is domiciled in Florida, rather than in Connecticut, which had been his legal residence.
So far, Goldman Sachs, on whose board Gupta sat, has been footing the bills because the bank's bylaws require it to pay the legal fees of its top officers and directors. Goldman is required to pay until Gupta has exhausted all avenues of appeal.
Shortly after he was convicted of insider trading charges in 2012, Gupta hired noted appellate lawyer and a former United States solicitor general, Seth P Waxman, to handle his appeal.
But Waxman has had little success pressing Gupta's case. In March, a three-judge panel of the United States Court of Appeals for the Second Circuit upheld Gupta's conviction. The court is considering his request to rehear his appeal.
Besides arguing that the wiretap recordings that helped convict Gupta were improper, a major element of his appeal will be that the lower courts erred on the question of whether a defendant is entitled to a jury instruction that "character testimony may in and of itself raise a reasonable doubt".
Gupta's lawyers have argued that the lower courts decision on this point contravenes the Supreme Court's position.
His fight to overturn his conviction has not been cheap. His total legal costs - including fees paid to his trial lawyers at Kramer Levin Naftalis & Frankel and to consultants and experts - stands at roughly $40 million.
In a deal hashed out with Goldman, Gupta agreed before his trial that he would reimburse the bank for his legal bills if he was found guilty of insider trading and his conviction was upheld. Last February, a federal judge ordered Gupta to pay Goldman more than $6.2 million for the legal expenses that the investment bank incurred in connection with his insider trading case, meaning that once all his appeals are exhausted Gupta is likely to owe Goldman about $50 million.
At one time, it appeared that the former McKinsey chief had ample assets. During his trial, a JPMorgan Chase private banker testified that Gupta had a net worth of more than $130 million in the spring of 2008.
But, like many, Gupta lost money during the financial crisis and several of his income streams - board of director fees, for instance, and payouts from McKinsey - have dried up since his legal troubles have come to light.
In recent weeks, anticipating that he will be away from his family for two years when he surrenders on June 17 to begin his prison sentence, Gupta has been spending time with each of his four daughters, taking short breaks with them. He recently returned from a trip with one to the Grand Canyon, a friend says.
Power elite
During his years at the helm of McKinsey, Gupta was among Manhattan's power elite, often seen lunching at hotspots such as the Four Seasons Grill Room. But since his conviction in 2012, Gupta rarely ventures to New York; he hasn't been seen at the Grill Room for years, and a sighting of him in December at upscale San Pietro had diners buzzing.
Anita Raghavan is the author of The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund
A federal judge, at the request of Gupta's lawyer, had recommended that Gupta be sent to a prison in Otisville, NY, but Gupta has been assigned to the satellite camp at FMC Devens in Ayer, Massachusetts, 40 miles northwest of Boston.
In an interesting twist, Rajaratnam, the man to whom Gupta was convicted of giving corporate secrets on a raft of companies, including Goldman Sachs, is in FMC Devens' federal medical centre. Rajaratnam, the founder of New York hedge fund Galleon Group, is a diabetic and FMC Devens' medical unit provides dialysis. His facility is next to the satellite camp where Gupta will be.
One of the differences between the two prisons is that Rajaratnam has slightly longer visiting hours. On Fridays, he can mix with friends and family from 8:30 a.m. to 3 pm; Gupta can receive guests only from 2:30 pm to 8:30 pm.
Gupta's effort to put off his two-year sentence ended this week when the Supreme Court rejected a request for a delay.
Since a federal jury in Manhattan found him guilty two years ago, Gupta has been putting his financial house in order, part of which involves paying regular visits to his villa in the Palm Island Resort in southwest Florida. The villa is also his legal residence.
For Gupta, his place of abode is not an academic question; it may be crucial to his financial future. In the event that his legal appeals are exhausted and he is forced as a result to pay the legal costs for his defence, he will be able to shield his home, regardless of its value, in any bankruptcy court proceeding if he is domiciled in Florida, rather than in Connecticut, which had been his legal residence.
So far, Goldman Sachs, on whose board Gupta sat, has been footing the bills because the bank's bylaws require it to pay the legal fees of its top officers and directors. Goldman is required to pay until Gupta has exhausted all avenues of appeal.
Shortly after he was convicted of insider trading charges in 2012, Gupta hired noted appellate lawyer and a former United States solicitor general, Seth P Waxman, to handle his appeal.
But Waxman has had little success pressing Gupta's case. In March, a three-judge panel of the United States Court of Appeals for the Second Circuit upheld Gupta's conviction. The court is considering his request to rehear his appeal.
Besides arguing that the wiretap recordings that helped convict Gupta were improper, a major element of his appeal will be that the lower courts erred on the question of whether a defendant is entitled to a jury instruction that "character testimony may in and of itself raise a reasonable doubt".
Gupta's lawyers have argued that the lower courts decision on this point contravenes the Supreme Court's position.
His fight to overturn his conviction has not been cheap. His total legal costs - including fees paid to his trial lawyers at Kramer Levin Naftalis & Frankel and to consultants and experts - stands at roughly $40 million.
In a deal hashed out with Goldman, Gupta agreed before his trial that he would reimburse the bank for his legal bills if he was found guilty of insider trading and his conviction was upheld. Last February, a federal judge ordered Gupta to pay Goldman more than $6.2 million for the legal expenses that the investment bank incurred in connection with his insider trading case, meaning that once all his appeals are exhausted Gupta is likely to owe Goldman about $50 million.
At one time, it appeared that the former McKinsey chief had ample assets. During his trial, a JPMorgan Chase private banker testified that Gupta had a net worth of more than $130 million in the spring of 2008.
But, like many, Gupta lost money during the financial crisis and several of his income streams - board of director fees, for instance, and payouts from McKinsey - have dried up since his legal troubles have come to light.
In recent weeks, anticipating that he will be away from his family for two years when he surrenders on June 17 to begin his prison sentence, Gupta has been spending time with each of his four daughters, taking short breaks with them. He recently returned from a trip with one to the Grand Canyon, a friend says.
Power elite
During his years at the helm of McKinsey, Gupta was among Manhattan's power elite, often seen lunching at hotspots such as the Four Seasons Grill Room. But since his conviction in 2012, Gupta rarely ventures to New York; he hasn't been seen at the Grill Room for years, and a sighting of him in December at upscale San Pietro had diners buzzing.
Anita Raghavan is the author of The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund
©2014 The New York Times News Service