Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 1 of 20 U.S. Department of Justice

United States Attorney Southern District of New York

The Silvio J. Mollo Building

One Saint Andrew’s Plaza New York, New York 10007 July 16, 2012

By Hand Delivery

The Honorable United States Circuit Court Judge United States Courthouse 500 Pearl Street New York, New York 10007

Re: United States v. , 10 Cr. 13 (DC)

Dear Judge Chin:

The Government respectfully submits this letter to advise the Court of the pertinent facts concerning the substantial assistance that defendant Anil Kumar has rendered in the investigation and prosecution of other persons. In light of these facts, the Government moves, pursuant to Section 5K1.1 of the Sentencing Guidelines, that the Court sentence the defendant in light of the factors set forth in Section 5K1.1(a)(1)-(5) of the Guidelines.

On or about January 7, 2010, Kumar pleaded guilty to Counts One and Two of the above-captioned Information. Count One of the Information charged Kumar with conspiring with other individuals to commit , in violation of Title 18 United States Code, Section 371, in connection with a scheme to engage in from in or about 2004 through in or about 2009. This charge carries a maximum sentence of five years’ imprisonment, a maximum term of three years’ supervised release, a maximum fine, pursuant to Title 18, United States Code § 3571, of the greatest of $250,000, twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss to a person other than the defendant as a result of the offense, and a mandatory $100 special assessment. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 2 of 20

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Count Two of the Information charged Kumar with securities fraud, in violation of Title 15, United States Code Sections 78j(b) and 78ff, and Title 18, United States Code, Section 2, in connection with a scheme to defraud by engaging in insider trading with respect to shares of Advanced Micro Devices Inc. (“AMD”). This charge carries a maximum sentence of 20 years’ imprisonment, a maximum term of three years’ supervised release, a maximum fine of $5 million, and a mandatory $100 special assessment.

I. Kumar’s Background

From approximately 1986 through on or about November 30, 2009, Kumar worked at McKinsey & Company ("McKinsey"). Kumar worked initially as an associate, then a project manager, then a junior partner, and then a senior partner or director. McKinsey fired Kumar shortly after his arrest on or about October 16, 2009.

On or about October 16, 2009, Kumar, Rajaratnam, and others were arrested by complaint on charges of insider trading.

II. Kumar’s Criminal Conduct

1. Kumar’s Illegal Agreement With Rajaratnam

From in or about 2004 through in or about 2009, Kumar repeatedly violated his fiduciary and other duties of confidentiality to McKinsey and its clients by disclosing secret information to Rajaratnam in exchange for money, friendship, and the prospect of future business opportunities. Kumar understood that Rajaratnam was trading based in part on Kumar’s information and that Kumar was violating the law by disclosing the information to Rajaratnam.

Kumar became friends with Rajaratnam at the Wharton School of the University of Pennsylvania in or about 1982. From in or about 1983 through in or about 1993, Kumar kept in touch with Rajaratnam while Rajaratnam worked at Needham & Company as a technology analyst. From in or about 1993 through in or about 1999, Kumar worked for McKinsey in and lost touch with Rajaratnam. After Kumar returned to the United States, in or about 2001, Kumar asked Rajaratnam to contribute money to the Indian School of Business. Kumar and co-founded the Indian School of Business and were raising money for the school. In response, Rajaratnam made an anonymous $1 million Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 3 of 20

Honorable Denny Chin July 16, 2012 Page 3 contribution, and Kumar informed Gupta about Rajaratnam's contribution.

From the early 1990s through 2009, Rajaratnam was the head of (“Galleon”), a multi-billion dollar . Its headquarters were located in . Rajaratnam managed the technology fund at Galleon, and he was in charge of nearly every aspect of the firm. Galleon had multiple portfolio managers who oversaw investments in particular funds specializing in particular areas, including technology, financial services, communications, and consumer products.

In or about September 2003, in the context of discussing whether McKinsey could provide Rajaratnam and Galleon with advice and other services, Rajaratnam offered to pay $500,000 a year to Kumar for Kumar’s insights. Kumar told Rajaratnam that Kumar was not allowed to receive money for consulting services outside of McKinsey work. Rajaratnam, however, told Kumar that Rajaratnam would help Kumar conceal the payments from McKinsey. Rajaratnam told Kumar to wire the money offshore to an account in someone else’s name, and then wire the money back into Galleon Group into an account at the hedge fund in the name of Kumar's housekeeper, Manju Das. Kumar agreed, initially believing Rajaratnam wanted legitimate business trend advice. Every few months thereafter, from in or about 2004 through in or about 2006, Rajaratnam wired approximately $125,000 to an account in Europe in the name of an entity that was not associated with Kumar directly, and the money was then wired back into a Galleon account in the name of Manju Das.

Once he accepted the money, Kumar felt obligated to answer Rajaratnam’s questions seeking material, nonpublic information about McKinsey’s clients. Kumar fully understood that by providing Rajaratnam with nonpublic information about McKinsey’s clients that Kumar was violating one of the most sacred McKinsey policies—maintaining the confidentiality of the secrets of McKinsey’s clients. Kumar had signed McKinsey’s certifications agreeing not to violate his duty of confidentiality, and Kumar had signed a confidentiality agreement with certain clients (including AMD) on McKinsey’s behalf. During his scheme with Rajaratnam, Kumar repeatedly violated his duties of confidentiality by sharing client secrets with Rajaratnam. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 4 of 20

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2. Kumar’s Illegal Tips To Rajaratnam In 2004 And 2005

Starting in or about 2004, Rajaratnam asked Kumar for information about AMD’s revenues, sales, and profits. Rajaratnam also asked Kumar for information about AMD’s guidance regarding its future earnings. Kumar had the privilege to attend senior management meetings with AMD’s top ten executives. During these meetings, Kumar learned secret information about AMD’s financial performance, and Kumar disclosed this information to Rajaratnam. In or about 2004, Kumar also disclosed to Rajaratnam that AMD was in discussions to sell a new chip called Opteron to Dell and Hewlett-Packard. Rajaratnam told Kumar that this was very useful information. In or about February 2004, AMD was able to obtain a $400 million contract to install Opteron chips in Hewlett-Packard products. Kumar informed Rajaratnam about this development prior to its public announcement on or about February 24, 2004.

Subsequently, Kumar informed Rajaratnam regarding the negotiations between AMD and Hewlett-Packard for Hewlett-Packard to transfer a lot of its business from Intel to AMD and become a major AMD customer. Rajaratnam kept asking Kumar if the deal was on track, and Kumar kept updating Rajaratnam that it was on track. Kumar told Rajaratnam that this was going to be fabulous news for AMD. The deal was announced in or about the Fall of 2004.

Subsequently, in late 2004 and early 2005, Kumar told Rajaratnam that AMD was going to spin out its memory business, leaving behind a much stronger computer processing business. On or about April 14, 2005, AMD announced that it was spinning out its memory business, which became a new company called Spansion.

During 2004 and 2005, Rajaratnam told Kumar that Rajaratnam was making good money on AMD and that Kumar’s information about AMD was valuable to Rajaratnam. Things changed by late 2005 when Rajaratnam told Kumar that Kumar’s information about the financial performance of AMD and Kumar’s other clients were not as detailed as Rajaratnam expected. Rajaratnam wanted to move toward an arrangement whereby Rajaratnam would share a portion of profits earned with Kumar’s information with Kumar. Rajaratnam proposed buying shares of AMD stock and the stock of other companies based on the information Kumar provided, and Kumar refused. Kumar was more comfortable with a consulting arrangement with Rajaratnam; Kumar believed that his receipt of shares would leave a paper trail and was more vulnerable to being Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 5 of 20

Honorable Denny Chin July 16, 2012 Page 5 uncovered. In 2006, Kumar and Rajaratnam agreed that Rajaratnam would pay Kumar at the end of each year based on the value of Kumar’s information. Kumar preferred this arrangement which was similar to arrangements that he had with McKinsey clients.

3. Kumar’s Illegal Tip About AMD’s Acquisition Of ATYT

From in or about late 2005 through in or about July 2006, Kumar tipped Rajaratnam about AMD’s confidential plans to acquire ATI Technologies (“ATYT”). As AMD’s outside consultant, Kumar was part of a small group of individuals who came up with the plan to acquire ATYT. Kumar participated in high-level meetings at AMD relating to the acquisition. Kumar participated in AMD management meetings regarding the negotiations with ATYT for the planned acquisition. As Kumar learned confidential information about the acquisition, he informed Rajaratnam. Rajaratnam then purchased shares of ATYT based on Kumar’s illegal tips. Kumar tipped Rajaratnam about this acquisition long before any public speculation about the deal, and months before AMD's public announcement of the transaction.

Internal emails at McKinsey show that Kumar learned secret information about the transaction for many months before it was announced. Those emails showed that Kumar was part of the inner circle at McKinsey advising AMD about acquiring ATYT. Based on Kumar’s secret information, by the end of March, Rajaratnam had purchased over 3 million shares of ATYT stock; by early May 2006, Rajaratnam had purchased approximately 4 million shares of ATYT stock; and by May 30, 2006, Rajaratnam had purchased nearly 5 million shares of ATYT stock with a value of approximately $74 million before there were any news articles or analysts speculating about a potential deal.

After AMD announced its acquisition of ATYT, Rajaratnam made over $22,938,866 in the accounts that he managed at Galleon. Shortly after this announcement, Rajaratnam called Kumar at home and told Kumar that he wanted to thank Kumar, that the news was fantastic, that Kumar was a hero, and that they were all cheering him right now. Kumar was nervous that others at Galleon knew that Kumar was providing Rajaratnam with material, nonpublic information about McKinsey’s clients. Kumar understood that Rajaratnam would share the secret information with others at Galleon, but he expected Rajaratnam to conceal that Kumar was the source of the information. At some point after Thanksgiving in 2006, Rajaratnam told Kumar that he was giving Kumar $1 million for the confidential information that Kumar had provided him that Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 6 of 20

Honorable Denny Chin July 16, 2012 Page 6 year. Rajaratnam told Kumar that Rajaratnam would put the money into Kumar’s Galleon account and asked Kumar to send him the name of the account by email. On or about December 13, 2006, Kumar sent Rajaratnam a one-line email stating “Manju Das.” Subsequently, instead of investing the $1 million in Kumar’s Manju Das account at Galleon, Rajaratnam wired the money to Kumar’s foreign account.

4. Kumar’s Illegal Tips To Rajaratnam In 2007 And 2008

In 2007, Kumar provided confidential information to Rajaratnam relating to another one of Kumar’s McKinsey clients, Business Objects. In or about the third quarter of 2007, Kumar told Rajaratnam that Kumar had visited Business Objects and learned that the company’s performance was not good. Shortly thereafter, Rajaratnam asked Kumar whether Kumar was sure about the information because Rajaratnam had shorted the stock. Kumar told Rajaratnam that he was sure. Ultimately, at the conclusion of the third quarter of 2007, Business Objects was purchased by another company and thus Rajaratnam lost money on his trading position in the stock. Kumar did not know that Business Objects was going to be acquired. Rajaratnam told Kumar that he was very upset that he lost money. Rajaratnam did not pay Kumar any money for the information that Kumar provided in 2007.

Starting in late 2007, Kumar provided Rajaratnam with confidential information about AMD’s “asset-light” strategy of reducing the cost of financing the production of chips so that AMD could focus on designing and selling the computer chips. Accordingly, AMD planned to seek outside investment from sovereign wealth funds around the world. Eventually, AMD narrowed its interest into investments from sovereign wealth funds in Brazil and Abu Dhabi in the United Arab Emirates, and ultimately from Mubadala in Abu Dhabi.

Kumar’s conspiracy with Rajaratnam was caught on a court-authorized wiretap over Rajaratnam’s cellular telephone for eight 30-day periods from approximately March 2008 through December 2008.

On multiple recorded conversations captured over the wiretap, Rajaratnam asked Kumar for material, nonpublic information, and Kumar provided it to him.

For example, during a March 24, 2008, conversation, Kumar called Rajaratnam from Tokyo. Kumar immediately told Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 7 of 20

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Rajaratnam about a corporate secret regarding a McKinsey client. Rajaratnam subsequently asked about a confidential investment of a “processor company” and the timing of the public announcement of that investment. That was an early reference to AMD’s reorganization which was subsequently announced in or about early October 2008. During the conversation, Kumar also conveyed information about AMD’s nonpublic quarterly earnings, specifically that AMD was going to announce an 11% to 15% reduction in revenues.

On or about May 2, 2008, Rajaratnam’s conversation with Kumar was also captured over the wiretap. During this conversation, Kumar told Rajaratnam that there was a term sheet due the next day for Spansion, a public company. Kumar learned about this term sheet from his conversation with the CEO of the company. It was nonpublic information. A term sheet reflected that Spansion was taking steps to be acquired. During the conversation, Rajaratnam asked Kumar whether they should buy some Spansion because of the term sheet, and Kumar told Rajaratnam that they should wait to see what offer comes the following day.

As Kumar's work on AMD’s reorganization continued, including the possible multi-billion dollar investment into AMD by Mubadala, Kumar provided that confidential information to Rajaratnam, and Rajaratnam traded based on it. Multiple recordings captured over Rajaratnam’s cellular telephone reflected that Kumar provided these secrets to Rajaratnam, and that Rajaratnam traded based on them. For example, on August 15, 2008, Kumar informed Rajaratnam that “they've shaken hands,” referring to the fact that the Middle Eastern fund and AMD had agreed in principle to the terms of the fund's investment in AMD. Rajaratnam then asked about the timing of the deal and whether he would get a heads up in advance of the announcement, and Kumar said he was able to provide that information to Rajaratnam. Rajaratnam also asked Kumar how the third quarter, which ended in September, was tracking, and Kumar responded that he would check on that. Rajaratnam asked how much the Middle Eastern fund was investing, and Kumar said up to 6 to 8 billion dollars. Rajaratnam asked Kumar whether he should purchase shares, and Kumar said “the announcement won’t happen ‘til, uh, the week after Labor Day.” Rajaratnam then said that he was going to buy one million shares of AMD stock.

On or about September 11, 2008, Kumar spoke with Rajaratnam again. This call was also captured over the wiretap. Kumar told Rajaratnam the exact timing of the public announcement Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 8 of 20

Honorable Denny Chin July 16, 2012 Page 8 that AMD planned to issue relating to the outside investment. Specifically, Kumar told Rajaratnam that the deal was on track and they’re moving the announcement date to the first week of October. Subsequently, Kumar told Rajaratnam that the deal would be announced on October 7, 2008, and the deal was announced to the public on that date.

Based in part on Kumar’s illegal tips about the reorganization, Rajaratnam purchased over $100 million dollars of AMD stock prior to the public announcement of the deal on October 7. (Rajaratnam also received information about the reorganization from Danielle Chiesi, who Rajaratnam knew was obtaining the information from the former Chairman of the Board of Directors and Chief Executive Officer of AMD, Hector Ruiz.) Although Rajaratnam lost money on these tips because Rajaratnam held on to AMD’s stock for a while and AMD’s stock did not increase in value during that time in the middle of the financial crisis, Rajaratnam executed the trades anticipating that the price of the stock would rise and that he would make millions of dollars.

On or about October 3, 2008, Kumar was captured on another wiretap calling tipping Rajaratnam about eBay’s plans to announce a massive layoff. Right after Kumar tipped Rajaratnam about this layoff, Rajaratnam shorted eBay’s stock, betting that the price of the stock would decline and that he would make money. Shortly thereafter, eBay announced the layoffs, and Rajaratnam reaped approximately $883,973 in illicit profits.

In 2008, Rajaratnam suggested multiple ways to pay Kumar. Rajaratnam offered the following alternative methods: (1) He offered to create a new fund of several hundred million dollars for Kumar to manage; (2) He offered to buy Kumar an apartment in New York; (3) He offered to return to a consulting agreement; indeed, a June 2008 wiretap call between Rajaratnam and Kumar captured a discussion between them about getting in touch with a Galleon employee regarding a new consulting arrangement; and (4) He offered to trade in any brokerage account that Kumar opened using Kumar's account number and password. Kumar rejected all of these offers, and continued to tip Rajaratnam with the understanding Rajaratnam would pay Kumar based on Rajaratnam’s judgment at the end of each year as to the value of the information Kumar provided him. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 9 of 20

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5. Kumar’s Trading In Starent

In or about October 2009, Kumar and Rajaratnam traveled to Trinidad for the wedding of a mutual friend. During a stopover in Miami for two days, Kumar and Rajaratnam went to the beach. While at the beach, Rajaratnam received a phone call and stepped away to speak privately with someone. When Rajaratnam returned, he was a little excited and told Kumar that Rajaratnam received a call that Cisco is going to buy the company called Starent Networks Communications (“Starent”). Kumar had not heard of Starent before. Rajaratnam further told Kumar that one of Rajaratnam’s former employees, Ali Far, was wearing a wire now and that Rajaratnam had to be really careful. Rajaratnam told Kumar to be careful and advised Kumar to use prepaid phones to make phone calls. Based on Rajaratnam’s tip, on or about October 7, 2009, Kumar purchased approximately 300 shares of Starent (with a value of approximately $7,000). On or about October 13, 2009, Cisco announced publicly that it was acquiring Starent. Three days later, on or about October 16, 2009, Rajaratnam and Kumar were arrested.

6. Rajaratnam’s Illegal Payments To Kumar

In total, Kumar received approximately $1.7 million in illegal payments from Rajaratnam and several hundred thousand dollars in profits in Galleon funds arising out of the illegal payments from Rajaratnam. During the course of the scheme from 2004 through 2009, Kumar did not pay any federal or state taxes based on the illegal monies received from Rajaratnam. As a result, Kumar repeatedly committed tax fraud. Since his arrest, Kumar has filed amended and corrected tax returns.

7. Kumar’s Motives

This case presents the baffling question of why an incredibly bright, highly accomplished, professional consultant, and senior partner at arguably the world’s leading consulting firm, who contributed considerable time to start the Indian School of Business and to other charities, would betray his profession’s core values, the confidences of his clients, and the trust of his McKinsey colleagues.

There is no easy answer. Unfortunately, Kumar joins the company of other similarly situated accomplished professionals who have crossed the same line and prompted the same question. Based on the evidence, it appears that Kumar’s Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 10 of 20

Honorable Denny Chin July 16, 2012 Page 10 motivations were mixed and varied. Initially, Kumar agreed to provide Rajaratnam with his ideas in violation of McKinsey’s policies to receive money and obtain the praise and admiration of a billionaire hedge fund manager. After Kumar started to get the money, and Rajaratnam probed for secret information, Kumar capitulated knowingly and readily because the money brought obligations, Kumar wanted to continue to impress Rajaratnam with his expertise, Rajaratnam tempted Kumar with future business opportunities, and Kumar valued Rajaratnam’s close friendship. On the one hand, Kumar was earning significant amounts of money at McKinsey and, as someone who lived relatively modestly, his assets far exceeded his liabilities. On the other, as soon as Rajaratnam probed for nonpublic information, Kumar could have simply refused to provide any and turned away. Once Kumar crossed the line, it became far easier for Kumar to disclose similar information. In short, while Rajaratnam certainly tempted Kumar (as well as others) with access to his money, power, and friendship, Kumar knowingly gave into that temptation and willingly became a part of Rajaratnam’s corrupt world. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 11 of 20

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III. Kumar’s Cooperation

Kumar’s cooperation was nothing short of extraordinary. He substantially helped the Government secure convictions in two of the most significant and high-profile trials of defendants for securities fraud in history, and Rajat Gupta. At both trials, Kumar’s testimony was absolutely essential. During Rajaratnam’s trial, Kumar provided the most important testimony regarding Kumar’s illegal tips to Rajaratnam, Rajaratnam’s payments to Kumar for these tips, and the efforts taken to conceal those payments from regulatory and other Governmental authorities. During Gupta’s trial, Kumar provided critical testimony regarding Gupta’s close relationship with Rajaratnam, Gupta’s and Rajaratnam’s involvement in launching a billion- dollar private equity firm, and Gupta’s statements to Kumar regarding his relationship with Rajaratnam following the bankruptcy of Lehman in September 2008. Significantly, upon his arrest, Kumar realized right away that his best hope of regaining some self-respect and the respect of his family, correcting his wrongs from the past, accepting responsibility for his criminal conduct, and moving forward was to use his undeniably acute mind, energy, and recollection to assist the Government in its investigation and prosecution of others. From the first day of Kumar’s cooperation through the present, he’s been one of the best and most important cooperating witnesses that the undersigned Assistant U.S. Attorneys and prior Assistant U.S. Attorneys working on the Rajaratnam investigation have worked with in securities fraud cases.

1. The Timing Of Kumar’s Cooperation

The speedy cooperation of Kumar shortly after his arrest was highly significant for the Government.

Kumar was arrested on October 16, 2009, the same day as Rajaratnam. Kumar’s arrest clearly shocked him. His arrest rocked his world to its core foundation, causing him to immediately faint when the FBI informed him that he was under arrest. Deciding what steps to take following his arrest, Kumar did not hesitate. Kumar did not second-guess. Kumar did not weigh his options. Instead, Kumar did what almost all individuals involved in Rajaratnam’s insider trading schemes notably did not do—Kumar decided to cooperate immediately with the Government. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 12 of 20

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In the context of the Government’s investigation and prosecution of Kumar, Kumar’s immediate cooperation warrants special mention and recognition. Very few individuals involved in Rajaratnam’s insider trading schemes agreed to cooperate, even though many were also caught on a wiretap disclosing and/or receiving inside information from Rajaratnam. In the world of Rajaratnam and his co-conspirators, cooperation was sadly viewed as a fundamental breach of trust to one another, and cooperators were viewed by many Galleon employees and other members of Rajaratnam’s criminal schemes as “ratting out” a trusted friend and thus a lowly, feeble, and pathetic action to take. In general, such logic is perverse and unfortunate. In the context of insider trading cases, it is remarkably ironic. Rajaratnam, Chiesi, and their other co-conspirators apparently believed it was better to go to jail than breach their criminal partnership and trust to one another even though their multiple crimes involved breaching or causing others to breach fiduciary and other obligations of trust to their employers and/or clients. This negative view of cooperation made the Government’s investigation into insider trading schemes at Galleon all the more difficult. Indeed, there remain active, ongoing criminal investigations of former Galleon employees that, although moving forward in a deliberate manner, would have been undoubtedly accelerated had additional Galleon employees agreed to cooperate.

The timing of Kumar’s cooperation was also significant because, at the time of Rajaratnam’s arrest, there was great skepticism in the financial services industry about the charges. Indeed, published reports and commentators in the financial services industry called into question whether the Government was criminalizing the job of financial analysts to ferret out nonpublic information about public companies. Kumar’s guilty plea and cooperation substantially ended that skepticism, and made it abundantly clear that the Government was prosecuting conduct that was clearly criminal and that took advantage of the average ordinary investor in the stock market. Finally, Kumar was the first of the individuals charged at or after the time of Rajaratnam’s arrest who agreed to cooperate with the Government. Following Kumar’s guilty plea, other individuals agreed to cooperate.

2. Kumar’s Proffers And Meetings With The Government

The Government only needed two in-person meetings with Kumar before deciding to sign him up to a cooperation agreement. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 13 of 20

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The brief number of proffers necessary before determining to sign Kumar up as a cooperating witness is telling. During those proffers, Kumar was clear, concise, and straightforward about his criminal conduct, and the conduct of others. Kumar did not understate or overstate his criminal activities; Kumar’s recollection was precise; Kumar’s statements were fully corroborated by wiretap recordings, documents, witness statements, and other evidence; and Kumar’s contrition and full acceptance of responsibility was clear beyond a shadow of any doubt.

Following his guilty plea, the Government spoke with Kumar in person and by phone on numerous occasions. The undersigned and other Assistant U.S. Attorneys met with Kumar in person on many occasions to obtain evidence and information in preparation for one of the most significant insider trading trials in history, United States v. Raj Rajaratnam. Rajaratnam became the modern poster child for illegal insider trading in the asset and money management community, and there was intense and widespread public attention to the investigation, the charges, and the subsequent trial.

During those meetings with the Assistant United States Attorneys and FBI agents, Kumar was always truthful, helpful, diligent, and cooperative. Kumar never complained when the Government wanted to speak with him again and again and again; Kumar never complained when asked to review tens of thousands of documents, including all of his McKinsey emails during the relevant period and his extensive calendar entries; Kumar never complained when asked to review numerous wiretap recordings and transcribe them; and Kumar never complained when the Government asked the same questions over and over again in various forms. During the course of his cooperation in connection with the Rajaratnam trial, Kumar spent over 50 days and hundreds of hours reviewing thousands of documents at the Government’s request, including identifying documents relevant to his criminal scheme with Rajaratnam. In short, prior to and during Rajaratnam’s trial, Kumar was the ideal cooperating witness who met with the Government without hesitation and without reservation.

Following Rajaratnam’s conviction, Kumar continued to speak by phone and meet with Assistant U.S. Attorneys and FBI agents in connection with the Government’s ongoing investigation of Rajat Gupta, and the subsequent prosecution and trial in United States v. Rajat Gupta. Indeed, Kumar’s cooperative attitude never waned for a second. Prior to and during Gupta’s Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 14 of 20

Honorable Denny Chin July 16, 2012 Page 14 trial, Kumar was, once again, the ideal cooperating witness who met with the Government without hesitation and without reservation. Kumar never complained even when he was present in New York (while his family was living in California) for days on end without knowing when he would be called as a witness. During the course of his cooperation in connection with the Gupta trial, Kumar met with the Government over ten times, including seven visits from California to New York.

A small example of Kumar’s cooperative approach reflects the nature of Kumar’s full acceptance of responsibility and unyielding commitment to being truthful and as helpful and available as possible to the Government. During the Gupta trial, Kumar was scheduled to testify on a Wednesday. However, because the testimony of the Government’s prior witnesses went longer than anticipated, the Government did not call Kumar that week and re-scheduled him to testify early the following week. Kumar flew back to California that weekend for a significant family commitment. Although Kumar was scheduled to spend the entire Sunday with many family members on an important family occasion, as previously planned with the consent of the Government, Kumar did not hesitate when the Government asked him to return on an earlier flight on Sunday so that the Government could meet with him yet again. Kumar altered his plans knowing full well that by returning earlier he would be unable to fulfill his family obligations that weekend because the Government had made the request.

In total, Kumar met with the Government in person and testified on over approximately 20 occasions, and spoke with Government representatives by phone on multiple occasions.

In sum, Kumar repeatedly met with the Government prior to the criminal trials of Rajaratnam and Gupta without complaint and fully interested in doing everything he could to answer the Government’s questions truthfully, review documents, transcribe recordings, and provide information.

3. Kumar Proffered About Extensive Criminal Conduct For Which He Was Not Charged Originally

Prior to his guilty plea, Kumar informed the Government about extensive criminal conduct for which he was not charged by complaint. For example, without knowing whether the Government had any evidence about Kumar’s illegal tips to Rajaratnam relating to AMD’s planned nonpublic acquisition of ATYT, Kumar Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 15 of 20

Honorable Denny Chin July 16, 2012 Page 15 disclosed his tips relating to this acquisition in detail to the Government. In doing so, Kumar demonstrated that he was willing to provide complete and accurate information to the Government about his criminal conduct even though it carried risks that Kumar would have to admit to far greater criminal conduct than the Government either knew or would be able to prove without that cooperation.

4. Kumar’s Trial Testimony And The Successful Prosecution Of Raj Rajaratnam

Kumar was one of the most important witnesses at the criminal trial of Rajaratnam. Rajaratnam was charged with five counts of conspiracy to commit securities fraud in connection with five separate insider trading conspiracies. One of those counts related to a conspiracy between Rajaratnam, Kumar, and others during which Kumar provided Rajaratnam with nonpublic information relating to AMD, ATYT, eBay, Business Objects, and other companies, in breach of Kumar’s fiduciary and other duties of confidentiality, so that Rajaratnam could trade based, in part, on that information at the expense of average ordinary investors. Rajaratnam was also charged with a substantive count of illegal insider trading in ATYT stock in connection with Kumar’s illegal tips to Rajaratnam about AMD’s acquisition of ATYT prior to public announcement.

The Government called Kumar as its second witness at Rajaratnam’s trial. Kumar was also the Government’s first of three cooperating witnesses who testified. Because Kumar’s testimony provided devastating evidence in detail about Rajaratnam’s criminal conduct, and was corroborated by wiretap recordings, documents, and other evidence, it was an obvious and easy decision to call Kumar as the first cooperating witness at trial.

Kumar testified over four days. Kumar was clearly contrite (as he had been since the very first day of his cooperation with the Government), truthful, and accepting of his criminal conduct throughout his testimony. Kumar explained every aspect of his criminal conspiracy with Rajaratnam in a chronological, clear, and concise fashion. Kumar took the jury through his relationship with Rajaratnam from the time that he graduated Wharton with Rajaratnam in 1983 through their arrests on October 16, 2009. Kumar also explained how his criminal conspiracy with Rajaratnam began, initially as a consulting arrangement with financial payments that violated McKinsey’s Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 16 of 20

Honorable Denny Chin July 16, 2012 Page 16 policies and procedures and U.S. tax laws and then transmogrified quickly into an arrangement where Kumar illegally tipped Rajaratnam with secret information in exchange for money and other benefits. Kumar further took the jury through multiple recorded conversations with Rajaratnam, explaining what he meant and what he understood Rajaratnam meant. Finally, Kumar explained the complicated round-trip wire transfers in the names of other entities and individuals (wired from Galleon to a European entity, wired back to Galleon in an account in the name of Kumar’s housekeeper, and then partial wire transfers back into a foreign account in the housekeeper’s name) through which Rajaratnam and Kumar attempted to conceal Rajaratnam’s payments for Kumar’s illegal tips.

Kumar’s testimony was nothing short of devastating. Kumar was credible, precise, and fully corroborated. Although Rajaratnam’s counsel repeatedly attacked Kumar’s credibility on cross-examination, it is readily apparent from the jury’s finding of guilty on both the conspiracy and substantive count relating to Kumar’s illegal tips to Rajaratnam that the jury credited Kumar’s testimony and rejected Rajaratnam’s counsel’s arguments to the contrary.

Prior to Kumar’s cooperation: (1) The Government did not know about Kumar’s illegal tips to Rajaratnam relating to AMD in 2004 and 2005 and Business Objects in 2007; (2) The Government had collected some evidence relating to Kumar’s illegal tips to Rajaratnam relating to AMD’s acquisition of ATYT, but not sufficient evidence to charge Rajaratnam and Kumar; and (3) The Government had collected some evidence relating the round-trip wire transfers used to conceal Rajaratnam’s illegal payments to Kumar, but again insufficient evidence to charge Rajaratnam and Kumar. Accordingly, without Kumar’s cooperation: (1) It is unlikely the Government would have been able to charge Kumar and Rajaratnam with Kumar’s illegal tips to Rajaratnam relating to AMD in 2004 and 2005, and Business Objects in 2007; and (2) It is unclear whether the Government would have been able to charge Rajaratnam with his illegal trading in ATYT stock and obtained all evidence relating to the round-trip wire transfers, as other individuals at Galleon refused to cooperate. With Kumar’s cooperation, and the extensive corroboration for his recollection of the facts, the Government was easily able to present additional charges to the grand jury and obtain an indictment and subsequent conviction against Rajaratnam for his trading in ATYT stock, and present extensive evidence of the use of the round- trip wire transfers. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 17 of 20

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The significance of adding Rajaratnam’s trading in ATYT stock based on Kumar’s illegal tips, and Kumar’s testimony regarding his tips and the round-trip wire transfers, cannot be overstated. First, Rajaratnam’s trading in ATYT resulted in nearly $23 million in illicit profits. It was an important reflection of the unlawful benefits of illegal insider trading, and it enabled the Government to show Rajaratnam’s motivations for committing illegal insider trading crimes despite his personal wealth and apparent business success. Second, the profits from Rajaratnam’s trading in ATYT was a significant driver of the Sentencing Guidelines range. Third, Kumar’s testimony was essential to explain somewhat ambiguous language during certain conversations and coded language during other conversations intercepted over the wiretap. There is no doubt that Kumar’s explanations of these conversations provided critical context and meaning for the jury. Fourth, Kumar provided critical evidence regarding Rajaratnam’s knowledge of the wrongfulness of his conduct, including testimony about Rajaratnam’s plans to conceal the monetary payments and Rajaratnam’s statements regarding the significance of Kumar’s illegal tips. Fifth, many of Rajaratnam’s defenses collapsed under the weight of Kumar’s testimony. For example, one of Rajaratnam’s defenses was that Kumar’s illegal tips was already public information. Through Kumar’s testimony, as corroborated by contemporaneous emails and other evidence, the Government was able to demonstrate that this defense made no sense whatsoever. Finally, Kumar’s testimony enabled to Government to explain in a clear and simple manner the complicated round-trip wire transfers that Kumar and Rajaratnam used to cover up Rajaratnam’s payments to Kumar. That testimony in conjunction with the contemporaneous records was incredibly effective in showing, among other things, that Rajaratnam knew what he was doing was wrong and illegal.

Rajaratnam was convicted of all fourteen counts against him and subsequently sentenced by the Honorable Richard J. Holwell to a term of imprisonment of 11 years. Judge Holwell also ordered Rajaratnam to pay a $1,400 special assessment, a fine of $10,000,000, and forfeiture in the amount of $53,816,434. The largest portion of the forfeiture amount was based on Kumar’s illegal ATYT tips to Rajaratnam.

5. Kumar’s Trial Testimony And The Successful Prosecution Of Rajat Gupta

Kumar was a significant witness at the criminal trial of Gupta. Gupta was charged with one count of conspiracy to Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 18 of 20

Honorable Denny Chin July 16, 2012 Page 18 commit securities fraud in connection with tipping Rajaratnam regarding nonpublic information about and Procter & Gamble. Gupta was also charged with multiple substantive counts in connection with Rajaratnam’s trading in those securities based, in part, on Gupta’s illegal tips.

A critical part of the case revolved around the nature of the relationship between Gupta and Rajaratnam. The Government argued that, among other things, Gupta tipped Rajaratnam because of their close friendship, because of Gupta’s business relationships with Rajaratnam, because of Gupta’s interest in obtaining a stake in Galleon, and because of Gupta’s interest in having Rajaratnam make Gupta whole on an investment that went sour after the collapse of Lehman Brothers. By contrast, Gupta argued, among other things, that he had no motive to tip Rajaratnam given Gupta’s independent business success and wealth, and that, by mid-to-late 2008, Gupta and Rajaratnam had a falling out over Rajaratnam’s mismanagement and fraudulent conduct in connection with Rajaratnam’s oversight of a fund called Voyager which Gupta and Rajaratnam co-founded and shared the equity ownership.

Kumar’s testimony directly and substantially undermined Gupta’s defenses. First, Kumar testified regarding the business ties between Gupta and Rajaratnam. For example, Kumar provided critical testimony of several in-person and telephonic meetings with Gupta, Rajaratnam, and Kumar during which the future of Galleon and Gupta’s role at Galleon was discussed. Kumar also explained the original discussions behind NSR, and both Gupta’s and Rajaratnam’s roles in founding and supporting this billion- dollar private equity firm. Second, Kumar explained the background of Gupta’s relationship with Rajaratnam, and provided critical context for that relationship. Finally, Kumar provided important testimony regarding Gupta’s statements to Kumar following the Lehman Brothers bankruptcy about Gupta’s investment in Voyager, Gupta’s hope that Rajaratnam would make Gupta whole after the collapse of the Voyager fund, and Gupta’s discovery after January 2009 of Rajaratnam’s fraudulent conduct in connection with Rajaratnam’s management of the Voyager fund. That timing undermined Gupta’s apparent defense that he had discovered Rajaratnam’s fraudulent conduct prior to or shortly after the bankruptcy of Lehman Brothers.

After a short period of deliberation, in a trial before the Honorable Jed S. Rakoff, the jury convicted Gupta of conspiracy to commit securities fraud and three of the five Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 19 of 20

Honorable Denny Chin July 16, 2012 Page 19 substantive counts of securities fraud. Judge Rakoff has scheduled the sentencing of Gupta for October 2012.

Notably, Kumar testified at the Gupta trial despite the fact that Gupta was Kumar’s mentor for much of Kumar’s career at McKinsey. Kumar and his family were close with Gupta and his family. Undoubtedly, given this personal relationship, although Kumar never said it, providing information helpful to the Government during the criminal investigation of Gupta and during the criminal trial of Gupta must have been difficult for him. That Kumar never complained about providing the information or testifying at Gupta’s trial is yet another reflection of Kumar’s full acceptance of responsibility and compliance with his cooperation agreement.

III. Conclusion

Kumar’s cooperation with the Government was absolutely essential in two of the most important securities fraud trials in history. Kumar provided essential evidence of his conspiracy with Rajaratnam in the trial of United States v. Raj Rajaratnam. That evidence included critical testimony of Kumar’s illegal arrangement to provide material, nonpublic information to Rajaratnam in exchange for money, the prospect of future business opportunities, and friendship; Rajaratnam’s elaborate scheme to conceal his payments to Kumar from McKinsey and others; and a detailed explanation of the meaning of numerous wiretap conversations between Rajaratnam and Kumar. Kumar also provided essential evidence of Gupta’s relationship with Rajaratnam and Gupta’s statements regarding that relationship in the trial of United States v. Rajat Gupta. That evidence included critical testimony of Gupta’s involvement in multiple conversations with Rajaratnam and Kumar regarding the future of Galleon and Gupta’s roles in Galleon; Gupta’s involvement in co-founding a billion- dollar private equity firm called or NSR with Rajaratnam and others; and Gupta’s statements to Kumar regarding Gupta’s relationship with Rajaratnam following the Lehman Brothers bankruptcy on or about September 15, 2008.

Based in part on Kumar’s cooperation, both Rajaratnam and Kumar were convicted. The successful prosecutions of Rajaratnam and Gupta have received widespread public attention and, as a result, should deter some people in the financial services industry who would otherwise be tempted to engage in similar misconduct. Case 1:10-cr-00013-DC Document 47-1 Filed 07/16/12 Page 20 of 20

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Identifying, uncovering, and prosecuting insider trading crimes is difficult. By their very nature, criminal insider trading conspiracies are secretive, and the participants, who generally are highly intelligent and resourceful, are able to conceal their activities well and create false explanations for their trading based on material, nonpublic information. Cooperators like Kumar are incredibly important in order to prosecute these cases. Even with wiretap evidence or other recordings, cooperators provide context and explanation for conversations which might otherwise be vague or unclear at times.

Kumar’s significant, powerful, and timely cooperation has provided substantial assistance to the Government in the investigation and prosecution of two of the most high profile defendants convicted of illegal insider trading in history. Therefore, this Court should sentence Kumar in light of the factors set forth in Section 5K1.1(a)(1)-(5) of the Sentencing Guidelines.

Respectfully submitted,

PREET BHARARA United States Attorney

By: /s/ Reed Brodsky Reed Brodsky/Richard Tarlowe Assistant United States Attorney Tel.: (212) 637-2492/2330 cc: U.S. Probation Officer Greg Morvillo, Esq.