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Indian jailed in Galleon case

Feb. 1: Roomy Khan, a central figure in the investigation that led to the conviction of the hedge fund manager Raj Rajaratnam, was sentenced to one year in prison on Thursday for illegally passing inside information and obstructing justice.

Despite the assistance that Khan, born and raised in Delhi, had provided prosecutors in the case against Rajaratnam, her actions — in particular, lying to federal investigators — were serious enough to merit a prison term, said Judge Jed S. Rakoff of the Federal District Court in Manhattan.

“You cannot have it both ways,” Judge Rakoff said. “You cannot obstruct justice and then say, ‘Well, because I’ve done good things since, forget about it’.”

Khan, 54, a onetime Intel executive who later worked at the Galleon Group, will not appeal the sentence, said her lawyer, Stanislao A. German. But he said he considered the punishment unduly severe.

In a separate case not directly related, Jason Pflaum, a witness who gathered evidence about his former boss, the hedge fund manager Samir Barai, was sentenced to two years of probation.

Pflaum, who pleaded guilty in 2010 to securities fraud and conspiracy to commit securities fraud, had helped prosecutors secure a guilty plea from Barai on insider trading charges.

Khan, who had sought five years of probation, pleaded guilty in 2009 to conspiracy to commit securities fraud and securities fraud, a charge that carried a maximum prison sentence of 20 years. She also admitted to lying to agents at the FBI.

Her lawyer had argued that she had been instrumental in the government's investigation, particularly the prosecution of Rajaratnam, the former head of the Galleon Group who is serving an 11-year prison term for insider trading.

It was an instant message that Khan sent to Rajaratnam in 2006, indicating that they were swapping secret information about a technology company, that first tipped off investigators that Rajaratnam was part of an insider trading conspiracy.

Khan cried as she read a statement to the court on Thursday, her voice shaking. She apologised to the court and her family. “I’ve lost all my money, and my education is rendered useless,” she said.

The government’s sweeping investigation into insider trading has relied heavily on cooperating witnesses to build its cases. Virtually all of those who cooperated have received sentences of probation, which does not involve a prison term.