NEW YORK-A for­mer Wall Street ti­tan was con­vict­ed yes­ter­day of mak­ing a for­tune by coax­ing a crew of cor­po­rate tip­sters in­to giv­ing him an il­le­gal edge on block­buster trades in tech­nol­o­gy and oth­er stocks-what pros­e­cu­tors called the largest in­sid­er trad­ing case ever in­volv­ing hedge funds. Raj Ra­jarat­nam was con­vict­ed of five con­spir­a­cy counts and nine se­cu­ri­ties fraud charges at the close­ly watched tri­al in fed­er­al court in Man­hat­tan. The ju­ry had de­lib­er­at­ed since April 25, and at one point was forced to start over again when one ju­ror dropped out due to ill­ness. Pros­e­cu­tors had al­leged the 53-year-old Ra­jarat­nam made prof­its and avoid­ed loss­es to­tal­ing more than US$60 mil­lion from il­le­gal tips. His Galleon Group funds, they said, be­came a multi­bil­lion-dol­lar suc­cess at the ex­pense of or­di­nary stock in­vestors who didn't have ad­vance no­tice of the earn­ings of pub­lic com­pa­nies and of merg­ers and ac­qui­si­tions.

Yes­ter­day, Ra­jarat­nam sat at the de­fense ta­ble, a rar­i­ty for him at the tri­al, and stayed mo­tion­less as the ver­dict was read. He will re­main free on bail, though now with elec­tron­ic mon­i­tor­ing, at least un­til his Ju­ly 29 sen­tenc­ing. Pros­e­cu­tors said Ra­jarat­nam faces a max­i­mum term of more than 19 years in prison.

US At­tor­ney Preet Bharara said the ver­dict sends a mes­sage that white col­lar laws ap­ply to every­one, "no mat­ter how much mon­ey you have." The de­fen­dant "was among the best and the bright­est, one of the most ed­u­cat­ed, suc­cess­ful and priv­i­leged pro­fes­sion­als in the coun­try," Bharara said in a state­ment. "Yet, like so many oth­ers, he let greed and cor­rup­tion cause his un­do­ing." Out­side court, with Ra­jarat­nam at his side, de­fence at­tor­ney John Dowd said there will be an ap­peal filed with the 2nd US Cir­cuit Court of Ap­peals. Of the 37 trades that the gov­ern­ment sought to pros­e­cute, he added, on­ly 14 made it to tri­al.

"The score is 23-14, in fa­vor of the de­fence," he said. "We'll see you in the 2nd Cir­cuit." The ver­dict came af­ter sev­en weeks of tes­ti­mo­ny show­cas­ing wire­taps of Ra­jarat­nam wheel­ing and deal­ing be­hind the scenes with cor­rupt ex­ec­u­tives and con­sul­tants. Some of the peo­ple on the oth­er end of the line plead­ed guilty and agreed to take the wit­ness stand against the Sri Lan­ka-born de­fen­dant. Au­thor­i­ties said the 45 tapes used in the case rep­re­sent­ed the most ex­ten­sive use to date of wire­taps-com­mon in or­gan­ised crimes and drug cas­es-in a white-col­lar case. The de­fense had fought hard in pre­tri­al hear­ings to keep the avalanche of au­dio ev­i­dence out of the tri­al by ar­gu­ing the FBI ob­tained it with a faulty war­rant. Once a judge al­lowed them in, pros­e­cu­tors put the record­ings to max­i­mum use by re­peat­ed­ly play­ing them for ju­rors.

"You heard the de­fen­dant com­mit his crimes time and time again in his own words," As­sis­tant US At­tor­ney Reed Brod­sky said in clos­ing ar­gu­ments. "The tapes show he didn't be­lieve the rules ap­plied to him," the pros­e­cu­tor added. "Cheat­ing be­came part of his busi­ness mod­el." The wire­taps ap­peared to play promi­nent­ly in the ju­rors' de­lib­er­a­tions: They asked to re­turn to the court­room count­less times so they could lis­ten to them again. US Dis­trict Judge Richard Hol­well told ju­rors not to talk about the de­lib­er­a­tions. Af­ter they were dis­missed, As­sis­tant US At­tor­ney Jonathan Streeter im­me­di­ate­ly asked the judge to jail Ra­jarat­nam, ar­gu­ing that his over­seas bank ac­counts and prop­er­ties gave him the means to flee the coun­try. The prospect of a lengthy prison term al­so gave him "tremen­dous in­cen­tive" to go un­der­ground, Streeter said.

But the judge ruled that Ra­jarat­nam could re­main free on $100 mil­lion bail as long as he was placed un­der house ar­rest at his Man­hat­tan home. When the court­room emp­tied, the de­fen­dant paced around and looked somber as he wait­ed to meet with his lawyers. The de­fense had ar­gued that the tapes re­vealed noth­ing more than that Ra­jarat­nam was do­ing his du­ty by ask­ing ques­tions about in­for­ma­tion al­ready cir­cu­lat­ing in the "re­al world" of high fi­nance. "That hap­pens every day on Wall Street," Dowd told the ju­ry. "There's noth­ing wrong with it." Dowd head­ed a team of at­tor­neys who crowd­ed around the de­fense ta­ble each day. The de­fen­dant took an un­cus­tom­ary po­si­tion on a bench be­hind them and lis­tened along with ju­rors as his voice filled the court­room. In one Ju­ly 29, 2008, call, Ra­jarat­nam could be heard grilling for­mer Gold­man Sachs board mem­ber Ra­jat Gup­ta about whether the board had dis­cussed ac­quir­ing a com­mer­cial bank or an in­sur­ance com­pa­ny. (Reuters)