- Associated Press - Thursday, October 13, 2011

NEW YORK A former billionaire described by the government as “the modern face of illegal insider trading” was sentenced Thursday to 11 years in prison, the longest insider-trading sentence ever but far short of the two decades sought by prosecutors.

Galleon Group LLC founder Raj Rajaratnam also was fined $10 million and ordered to forfeit $53.8 million by U.S. District Judge Richard J. Holwell, who said he concluded that Rajaratnam made well over $50 million in profits from his illegal trades.

“His crimes and the scope of his crimes reflect a virus in our business culture that needs to be eradicated,” Judge Holwell said. “When the integrity of the marketplace is called into question, the public suffers.”

The sentence eclipsed by one year the prison term given to one of Rajaratnam’s co-defendants just weeks ago.

The Sri Lanka-born Rajaratnam, 54, was ordered to report Nov. 28 to a yet-to-be-designated prison. His attorneys asked that he be allowed to report to the medical facility at the Butner Federal Correctional Complex in North Carolina, where Bernard Madoff is serving his 150-year sentence after admitting to a multidecade Ponzi scheme that cheated thousands of people out of billions of dollars.

The judge gave Rajaratnam leniency, citing his need for a kidney transplant and his advanced diabetes. And he credited Rajaratnam’s charitable work, which he called “the defendant’s responsiveness to and care for the less privileged.” The judge cited Rajaratnam’s work to help victims of the earthquake in Pakistan and Sept. 11, among others.

Asked if he wished to speak, Rajaratnam said only, “No thank you.” He has been a quiet presence at all of his court proceedings, declining even to sit at the defense table during his trial. When he stepped off the elevator on the floor of his courtroom Thursday, he was carrying a water bottle and casually asked no one in particular: “Which way?”

The sentencing culminates a series of convictions and sentencings that followed the October 2009 announcement of Rajaratnam’s arrest. More than two dozen people were arrested; all were convicted. The other defendants got sentences ranging from a few months to 10 years. The probe touched off a related investigation of those on Wall Street who corrupt the research purpose of networking firms by letting unscrupulous public-company employees spill secrets to hedge fund managers.

The case drew intense coverage in much the way the prosecutions of Michael Milken and Ivan Boesky had two decades before. Boesky was a stock speculator who pleaded guilty to charges and was released in 1990 after serving two years in prison. Milken was known as the junk-bond king. He pleaded guilty to securities violations in 1989, served 22 months in prison and paid a $200 million fine.

The Rajaratnam probe relied heavily on the most extensive use of wiretaps ever for a white-collar case, capturing conversations in which Rajaratnam and his co-conspirators could be heard gleefully celebrating their inside information.

• AP writer Karen Matthews contributed to this report.