Case 1:09-cr-01184-RJH Document 304 Filed 08/09/11 Page 1 of 79 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - X : UNITED STATES OF AMERICA, : : - v.- : : S2 09-CR-1184 (RJH) RAJ RAJARATNAM, : : Defendant. : - - - - - - - - - - - - - - - - - - - - - - - - - X SENTENCING MEMORANDUM ON BEHALF OF RAJ RAJARATNAM John M. Dowd Terence J. Lynam Jeffrey M. King Samidh Guha James E. Sherry Catherine E. Creely AKIN GUMP STRAUSS HAUER & FELD LLP 1333 New Hampshire Avenue, NW Washington, DC 20036 (202) 887-4000 August 9, 2011 Case 1:09-cr-01184-RJH Document 304 Filed 08/09/11 Page 2 of 79 TABLE OF CONTENTS Page I. INTRODUCTION ...............................................................................................................1 II. THE HISTORY AND CHARACTERISTICS OF THE DEFENDANT .............................3 A. Mr. Rajaratnam’s Personal Background And Education..........................................3 B. Mr. Rajaratnam’s Professional Achievements And Founding Of The Galleon Group ..........................................................................................................4 C. Mr. Rajaratnam’s Personal And Family Life ...........................................................8 D. Mr. Rajaratnam’s Outstanding Record Of Supporting Needy Organizations And Individuals ......................................................................................................10 III. THE ADVISORY SENTENCING GUIDELINES ............................................................14 IV. THE NATURE AND SERIOUSNESS OF THE OFFENSE .............................................17 V. THE CALCULATION OF GAIN UNDER THE SENTENCING GUIDELINES ...........20 A. The Government’s Methodology Is Flawed And Improperly Inflates The Profits On The Trades In Question ........................................................................21 B. The More Accurate Approach To Calculating Profit .............................................25 C. The Gain Amount Should Not Include “Losses Avoided” .....................................26 D. The Gain Amount Should Be Limited To Gains Actually Realized By The Defendant ...............................................................................................................31 VI. THE GUIDELINES CALCULATION OVERSTATES THE SERIOUSNESS OF THE OFFENSE .................................................................................................................35 VII. NO LEADERSHIP ENHANCEMENT IS APPROPRIATE UNDER USSG §3B1.1. ...............................................................................................................................39 VIII. NO OBSTRUCTION ENHANCEMENT IS APPROPRIATE UNDER USSG § 3C1.1 ..............................................................................................................................44 A. Legal Principles .....................................................................................................45 B. Mr. Rajaratnam Did Not Obstruct Justice ..............................................................46 IX. THE NEED TO PROVIDE MEDICAL CARE TO THE DEFENDANT IN THE MOST EFFECTIVE MANNER ........................................................................................55 X. THE NEED TO AVOID UNWARRANTED SENTENCING DISPARITIES ..................58 XI. CONCLUSION ..................................................................................................................67 i Case 1:09-cr-01184-RJH Document 304 Filed 08/09/11 Page 3 of 79 TABLE OF AUTHORITIES Page(s) CASES Basic, Inc. v Levinson, 485 U.S. 224 (1988) .................................................................................................................48 Bateman Eichler, Hill, Richards, Inc. v. Berner, 472 U.S. 299 (1985) .................................................................................................................20 Bronston v. United States, 408 U.S. 352 (1973) ...........................................................................................................46, 50 Dirks v. SEC, 463 U.S. 646 (1983) .................................................................................................................18 Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005) ...........................................................................................................21, 22 In re Flag Telecom Holdings, Ltd. Securities Litig., 245 F.R.D. 147 (S.D.N.Y. 2007) .............................................................................................25 In re Northern Telecom Ltd. Securities Litig., 116 F. Supp. 2d 446 (S.D.N.Y. 2000) ......................................................................................25 SEC v. Monarch Fund, 608 F.3d 938 (2d Cir. 1979)...............................................................................................19, 20 SEC v. Tome, 638 F. Supp. 596 (S.D.N.Y. 1986)...........................................................................................20 United States v. Adelson, 441 F. Supp. 2d 506 (S.D.N.Y. 2006) ....................................................................15, 16, 65, 66 United States v. Ayers et al., No. 2:03-cr-00183 (N.D. Ala. Dec. 10, 2003) .........................................................................62 United States v. Barbato, No. 00-CR-1028, 2002 WL 31556376 (S.D.N.Y. Nov. 15, 2002) ..........................................56 United States v. Beam, No. 2:03-cr-00197 (N.D. Ala. Aug. 25, 2005) .........................................................................62 United States v. Ben-Shimon, 249 F.3d 98 (2d Cir. 2001).......................................................................................................45 United States v. Blarek, 7 F. Supp. 2d 192 (E.D.N.Y. 1998) .........................................................................................57 ii Case 1:09-cr-01184-RJH Document 304 Filed 08/09/11 Page 4 of 79 United States v. Booker, 543 U.S. 220 (2005) .................................................................................................................15 United States v. Brennan, 395 F.3d 59 (2d Cir. 2005).......................................................................................................58 United States v. Burgos, 324 F.3d 88 (2d Cir. 2003).......................................................................................................44 United States v. Butler, 264 F.R.D. 37 (E.D.N.Y. 2010) ...............................................................................................66 United States v. Carrozzella, 105 F.3d 796 (2d Cir. 1997).....................................................................................................40 United States v. Carter, 449 F.3d 1287 (D.C. Cir. 2006) ...............................................................................................42 United States v. Cavera, 550 F.3d 180 (2d Cir. 2008)...............................................................................................15, 58 United States v. Chiesi, 1:09-cr-01184-RJH-2…………………………………………………………………….…..59 United States v. Conner, 217 Fed. Appx. 28 (2d Cir. 2007) ......................................................................................64, 65 United States v. Cusimano, 123 F.3d 83 (2d Cir. 1997).......................................................................................................48 United States v. Cushman, 123 F.3d 83, 90 (2d Cir. 1997)…………………………………………………………….…66 United States v. Dorvee, 616 F.3d 174 (2d Cir. 2010).....................................................................................................58 United States v. Dunnigan, 507 U.S. 87 (1993)………………..…………………………………………………..……...45 United States v. Endo, 635 F.2d 321 (4th Cir. 1980) ...................................................................................................48 United States v. Eyman, 313 F.3d 741 (2d Cir. 2002).....................................................................................................39 United States v. Goffer, No. 10-CR-00056 .....................................................................................................................48 iii Case 1:09-cr-01184-RJH Document 304 Filed 08/09/11 Page 5 of 79 United States v. Greenfield, 44 F.3d 1141 (2d Cir. 1995).....................................................................................................42 United States v. Hariri, 1:10-cr-00173-RJH-1…………………………………………………………………..…….60 United States v. Harris, No. 2:03-cr-00157 (N.D. Ala. Nov. 8, 2004) ...........................................................................62 United States v. Hartstein, 500 F.3d 790 (8th Cir. 2007) ....................................................................................................21 United States v. Hicks, No. 2:03-cr-00375 (N.D. Ala. Sept. 22, 2005) ........................................................................62 United States v. Jiminez, 212 F. Supp. 2d 214 (S.D.N.Y. 2002) ................................................................................56, 57 United States v. Johnson, 284 F.Supp. 273 (D. Mo. 1068) ...............................................................................................48 United States v. Johnson, 567 F.3d 40 (2d Cir. 2009).......................................................................................................15 United States v. Kumar, No. 04 Cr. 846 (E.D.N.Y. Nov. 2, 2006) .................................................................................62