Case 1:11-cr-00907-JSR Document 123 Filed 10/17/12 Page 1 of 99 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ––––––––––––––––––––––––––––––––––––––––– x : UNITED STATES OF AMERICA : No. S1 11 Cr. 907 (JSR) - against - : RAJAT K. GUPTA, : Defendant. : ––––––––––––––––––––––––––––––––––––––––– x SENTENCING MEMORANDUM OF RAJAT K. GUPTA KRAMER LEVIN NAFTALIS & FRANKEL LLP 1177 Avenue of the Americas New York, New York 10036 (212) 715-9100 Attorneys for Rajat K. Gupta KL3 2899754.1 Case 1:11-cr-00907-JSR Document 123 Filed 10/17/12 Page 2 of 99 TABLE OF CONTENTS Page I. PRELIMINARY STATEMENT .........................................................................................1 II. MR. GUPTA’S PERSONAL BACKGROUND AND CHARACTER ...............................3 A. Personal History, Education, and Career .................................................................3 1. Early Life .....................................................................................................3 2. Indian Institute of Technology .....................................................................5 3. Harvard Business School .............................................................................6 4. McKinsey .....................................................................................................8 B. Family ....................................................................................................................13 C. Compassion, Kindness and Generosity..................................................................19 1. Compassion and Support ...........................................................................20 2. Financial Support .......................................................................................23 3. Acts of Kindness ........................................................................................26 4. Mentoring, Guidance and Support .............................................................29 D. Humanitarianism ....................................................................................................33 1. The Global Fund to Fight AIDS, TB and Malaria .....................................35 2. The Public Health Foundation of India ......................................................40 3. Indian School of Business ..........................................................................43 4. American India Foundation .......................................................................46 5. The United Nations ....................................................................................48 6. Other Humanitarian Efforts .......................................................................50 III. ADVISORY GUIDELINES CALCULATION .................................................................55 A. Gain Should be Calculated Based on the “Value” Actually Realized by Rajaratnam .............................................................................................................56 B. Proper Calculation of Losses Avoided for the October 2008 Trades ....................60 i Case 1:11-cr-00907-JSR Document 123 Filed 10/17/12 Page 3 of 99 C. Expressly Acquitted Conduct Should Not Be Included in the Gain Calculation .............................................................................................................63 D. Tips Charged Only as Overt Acts Should Not Be Included in the Gain Calculation .............................................................................................................65 IV. A NON-GUIDELINES SENTENCE OF PROBATION WITH A CONDITION OF RIGOROUS, FULL-TIME COMMUNITY SERVICE IS APPROPRIATE ..............67 A. The Guidelines Place Undue Reliance on Gain in Insider Trading Cases .............68 B. A Non-Custodial Sentence is Warranted Under Section 3553(a) ..........................72 1. An Individualized Assessment of Mr. Gupta’s Personal History and Characteristics, and the Nature of his Conduct, Warrant a Non- Custodial Sentence .....................................................................................72 (a) Lifetime of Good Works ............................................................... 73 (b) Aberrational Conduct .................................................................... 75 2. A Non-Custodial Sentence is Appropriate in Order to Avoid Unwarranted Disparities With Closely Comparable Cases .......................75 3. A Non-Custodial Sentence is Sufficient to Deter Others ...........................82 V. A SENTENCE OF PROBATION WITH A CONDITION OF RIGOROUS, FULL-TIME COMMUNITY SERVICE IS SUFFICIENT TO ACHIEVE THE GOALS OF SENTENCING ..............................................................................................85 1. Covenant House .........................................................................................87 2. Rwanda ......................................................................................................89 VI. CONCLUSION ..................................................................................................................92 ii Case 1:11-cr-00907-JSR Document 123 Filed 10/17/12 Page 4 of 99 TABLE OF AUTHORITIES Page(s) CASES Dirks v. S.E.C., 463 U.S. 646 (1983) .................................................................................................................71 Stinson v. United States, 508 U.S. 36 (1993) ...................................................................................................................57 United States v. Adelson, 441 F. Supp. 2d 506 (S.D.N.Y. 2006) ..........................................................................67, 68, 85 United States v. Baldwin, 389 F. Supp. 2d 1 (D.D.C. 2005), aff’d, 563 F.3d 490 (D.C. Cir. 2009) .................................64 United States v. Brady, 02 Cr. 1043 (JG), 2004 WL 86414 (E.D.N.Y. Jan. 20, 2004) .................................................85 United States v. Canova, 412 F.3d 331 (2d Cir. 2005).....................................................................................................74 United States v. Carvajal, 04 Cr. 222 (AKH), 2005 WL 476125 (S.D.N.Y. Feb. 22, 2005) ............................................63 United States v. Cavera, 550 F.3d 180 (2d Cir. 2008) (en banc) ....................................................................................55 United States v. Coleman, 370 F. Supp. 2d 661 (S.D. Ohio 2005) ....................................................................................64 United States v. Concepcion, 983 F.2d 369 (2d Cir. 1992) (Newman, J., concurring) ...........................................................64 United States v. Contorinis, No. 11-3-cr, 2012 WL 3538270 (2d Cir. Aug. 17, 2012) ..................................................57, 58 United States v. Cooper, 394 F.3d 172 (3d Cir. 2005).....................................................................................................75 United States v. Coughlin, No. 06-20005, 2008 U.S. Dist. LEXIS 11263 (W.D. Ark. Feb. 1, 2008) ................................85 United States v. Crosby, 397 F.3d 103 (2d Cir. 2005).....................................................................................................67 iii Case 1:11-cr-00907-JSR Document 123 Filed 10/17/12 Page 5 of 99 United States v. Crouse, 145 F.3d 786 (6th Cir. 1998) ...................................................................................................75 United States v. Emmenegger, 329 F. Supp. 2d 416 (S.D.N.Y. 2004) ......................................................................................70 United States v. Gray, 362 F. Supp. 2d 714 (S.D. W.Va. 2005), aff’d, 491 F.3d 138 (4th Cir. 2007) ........................64 United States v. Greene, 249 F. Supp. 2d 262 (S.D.N.Y. 2003) ......................................................................................74 United States v. Howe, 543 F.3d 128 (3d Cir. 2008).....................................................................................................74 United States v. Huerta-Rodriguez, 355 F. Supp. 2d 1019 (D. Neb. 2005), aff’d, 158 F. App’x 754 (8th Cir. 2005) .....................64 United States v. Jones, 460 F.3d 191 (2d Cir. 2006).....................................................................................................67 United States v. Kurland, 718 F. Supp. 2d 316 (S.D.N.Y. 2010) ......................................................................................77 United States v. McDermott, 00 Cr. 61 (KMW), 2000 WL 35515558 (S.D.N.Y. July 19, 2000) ...................................80, 81 United States v. Mooney, 425 F.3d 1093 (8th Cir. 2005) .................................................................................................57 United States v. Nacchio, 573 F.3d 1062 (10th Cir. 2009) .........................................................................................57, 61 United States v. Oakford Corp., 98 Cr. 144 (JSR), 1999 WL 1201725 (S.D.N.Y. Dec. 13, 1999) ............................................71 United States v. Pimental, 367 F. Supp. 2d 143 (D. Mass. 2005) ................................................................................63, 67 United States v. Preacely, 628 F.3d 72 (2d Cir. 2010) (Lynch, J., concurring) .................................................................67 United States v. Rajaratnam, 09 Cr. 1184 (RJH), 2012 WL 362031 (S.D.N.Y. Jan. 31, 2012) ..................................... passim United States v. Serafini, 233 F.3d 758 (3d Cir. 2000).....................................................................................................75