Authors: Anita Raghavan
Tags: #Finance, #Business & Economics
“Isn’t this the woman you were talking about?”:
First reported in George Packer, “A Dirty Business: New York City’s Top Prosecutor Takes on Wall Street Crime,”
New Yorker
, June 27, 2011.
Michaelson scouring the blue sheets for Kumar’s name and receiving three boxes of documents from Texas:
US v. Rajaratnam
, Franks hearing, Testimony of Andrew Michaelson, October 5, 2010.
Israel Friedman’s involvement in the case:
Ibid.
“Blackstone may have tipped Galleon”:
US v. Rajaratnam
, Franks hearing, Michaelson Exhibit 73, FBI memo, July 11, 2007.
The instant-message exchange between rajatgalleon and roomy81 and the importance of it in the Galleon investigation:
US v. Rajaratnam
, Franks hearing, Government Exhibit 24, Email from Andrew Michaelson on July 10, 2007, containing instant-message exchanges between Rajaratnam and Khan; first reported by Susan Pulliam, “The Network: The Feds Close In: Fund Chief Snared by Taps, Turncoats—Prosecutors Stalk Galleon’s Rajaratnam After Finding a Revelatory Text Message,”
Wall Street Journal
, December 30, 2011; Packer, “A Dirty Business.”
When Friedman found Polycom dragging its feet:
Polycom disputes that it was slow to respond and says it cooperated with the government probe.
Rajaratnam’s fiftieth-birthday bash in Kenya:
Anita Raghavan, “Power and Pleasure,”
Forbes
, October 11, 2010.
Kang’s discovery of Khan’s criminal past:
Packer, “A Dirty Business.”
“Intel and the FBI agree that the primary culprit”:
US v. Rajaratnam
, Franks hearing, Government Exhibit 2, Electronic communication from FBI special agent Russell Atkinson, April 29, 1998.
Near the top of Michaelson’s agenda was Roomy Khan:
US v. Rajaratnam
, Franks hearing, Michaelson testimony, October 5, 2010.
The FBI’s approach to Khan on November 28, 2007:
First reported in Pulliam, “The Network”; Packer, “A Dirty Business”;
US v. Rajaratnam
, Defendant Raj Rajaratnam’s Memorandum of Law in Support of His Motion to Suppress Evidence Derived from Wiretap Interceptions of His Cellular Telephone, May 7, 2010, Exhibit A.16, FBI 302 Memorandum of Interview with Roomy Khan, November 28, 2007.
Her Atherton house was on the market for $18 million:
Packer, “A Dirty Business.”
“I personally have been going through very tough times”:
Email from Roomy Khan to Sunil Bhalla, March 29, 2007.
“Yes, personally losing all the money hurt a lot”:
Email from Bhalla to Khan, March 30, 2007.
Khan fled to the bathroom and returned saying, “If I don’t cooperate”:
Packer, “A Dirty Business.”
Israel Friedman sent letters to Charles Schwab:
US v. Rajaratnam
, Franks hearing, Michaelson Exhibit 67, Letter sent by Israel Friedman to Michael Gloster, Schwab, November 29, 2007.
Somebody at Galleon logged into Goel’s account at Schwab:
US v. Rajaratnam
, Franks hearing, Michaelson testimony, October 5, 2010.
Bought $264,284.95 worth of Hilton stock:
US v. Rajaratnam
, Government Exhibit 1276, Rajiv and Alka Goel Charles Schwab account statement showing purchase of 7,500 shares of Hilton stock on July 3, 2007, for $264,284.95.
Made $78,000:
US v. Rajaratnam
, Government Exhibit 1277, Rajiv and Alka Goel Schwab statement showing sale of 7,500 shares of Hilton on July 6 for $342,905.80, for a profit of $78,620.85.
Rajaratnam and Kumar arrived at Wharton in 1981:
US v. Rajaratnam
, Sentencing Memorandum on behalf of Raj Rajaratnam (hereafter Rajaratnam sentencing memo);
US v. Anil Kumar
, Sentencing Memorandum submitted on behalf of Anil Kumar.
“You had this interesting demographic anomaly” and subsequent remarks by Prashad:
Interview with Vijay Prashad, October 13, 2010.
America embarking on two new tracks that played to the strengths of Indian immigrants:
Interview with Professor Marcelo M. Suarez-Orozco, July 15, 2010.
Indian immigration jumped to 22,600:
U.S. Census Bureau,
Statistical Abstract of the United States: 1984
(104th Edition), Washington, DC, 1984: http://www2.census.gov/prod2/statcomp/documents/1984-01.pdf.
More than thirty South Asians in the class:
Wharton class of 1983 list.
Rajaratnam’s father joined Singer Sewing Machine:
Suketu Mehta, “The Outsider,”
Newsweek
, October 23, 2011, says he was the head of Singer in South Asia.
“the defining catastrophe of post-colonial Sri-Lankan history” and the Sinhala-only policy:
Philip Gourevitch, “Letter from Sri Lanka, Tides of War,”
New Yorker,
August 1, 2005.
Rajaratnam was the second oldest of five children:
Rajaratnam sentencing memo.
The family lived in Cinnamon Gardens:
C. Bryson Hull and Shihar Aneez, “In His Native Sri Lanka, Convicted Rajaratnam Is No Household Name,” Reuters News, May 12, 2011.
Raj attended St. Thomas’ Preparatory School:
Katherine Burton and Saijel Kishan, “Raj Rajaratnam Became Billionaire Demanding Edge,” Bloomberg, October 19, 2009.
When he was seventeen years old he was sent to study at Dulwich:
According to an email dated February 2, 2012, from Calista M. Lucy, archivist, Dulwich College (hereafter Lucy email), Rajaratnam was at Dulwich between September 1974 and December 1976.
Dulwich is a boys’ school in southeast London, better known for churning out writers like Michael Ondaatje:
See http://www.english.emory.edu/Bahri/Ondaat.html; http://www.dulwich.org.uk/college/about/the-masters-welcome.
In a 2011 interview, he said he lived in the same room as P. G. Wodehouse:
Mehta, “The Outsider.”
By the time Rajaratnam arrived at Dulwich, Wodehouse’s old dormitory was the headmaster’s residence:
Lucy email.
“We started pushing and shoving”:
Mehta, “The Outsider.”
Rajaratnam stayed at Dulwich to take the Oxbridge exams and did not pass:
Lucy email.
He headed to the University of Sussex, where he received a bachelor of science in engineering:
Rajaratnam sentencing memo.
“He was so charismatic”:
Gregory Zuckerman and Robert A. Guth, “Rajaratnam: Relentless Pursuit of Data,”
Wall Street Journal
, October 24, 2009.
Krishen Sud, Tom Fernandez, and David Lau:
All are listed as members of the Wharton class of 1983.
The incident between Rajaratnam and Kumar after a statistics exam:
Mehta, “The Outsider.”
“They were both incredibly smart”:
Interview with Tushar Mody, August 29, 2011.
On January 3, 2008, Khan came to proffer:
US v. Rajaratnam
, Franks hearing, Testimony of Andrew Michaelson, October 5, 2010.
Khan received the information on Google from Shammara Hussain:
US v.
Whitman
, Testimony of Roomy Khan, August 7, 2012.
Khan and Hussain met at a technology conference:
Ibid.; first reported by Susan Pulliam, “The Network: The Feds Close In: Fund Chief Snared by Taps, Turncoats—Prosecutors Stalk Galleon’s Rajaratnam After Finding a Revelatory Text Message,”
Wall Street Journal
, December, 30, 2009.
Hussain, like Khan’s husband, was from Bangladesh:
US v. Whitman
, Khan testimony, August 7, 2012.
Advising her on how to dress and telling her she was like a daughter:
Pulliam, “The Network.”
“Saving money is boring”:
John Carney, “Galleon’s Google Tipster Identified as Active Stock Blogger,”
Business Insider
, October 27, 2009.
“Short Google” and Khan’s subsequent conversations with Hussain on Google:
US v. Whitman
, Khan testimony, August 7, 2012.
Hussain seeking between $100,000 and $200,000 for her Google tip:
Ibid.
Khan giving her a cell phone in the name of her cleaner:
Ibid.
Rajaratnam taking a $25 million short position in Google and making millions of dollars:
US v. Rajaratnam
, Government Brief, US Court of Appeals for the Second Circuit (Docket No. 11-4416).
Khan netting a profit of more than $500,000 on Google:
US
v. Whitman
, Khan testimony, August 7, 2012.
Khan said she made the Hilton trades on the advice of her broker:
US v. Rajaratnam
, Franks hearing, Michaelson testimony, October 5, 2010.
She picked Hilton because socialite Paris Hilton had been arrested:
Ibid.
Neither Michaelson nor the prosecutors bought her story:
Ibid.
By March 2008, Michaelson felt like he had hit a wall:
Ibid.
Only two stocks, Polycom and Google, for which the authorities had direct evidence from Khan:
Ibid.
Rajaratnam alone traded as many as 12 million shares a day
: Rajaratnam SEC testimony.
Adam Smith joined Galleon in 2002 and was promoted to portfolio manager in 2006:
US v. Rajaratnam
, Testimony of Adam Smith, March 29, 2011.
Rajaratnam’s discussions with Smith about trading around a position:
Ibid.
The March 3, 2008, draft of a list of stocks with the suspected sources:
US v. Rajaratnam
, Franks hearing, Michaelson Exhibit 128, List of stocks where insider trading was suspected and possible source.
The first stock was AMD and the name next to it was Bharath Rangarajan:
Ibid.
In 2008, US judges approved 1,891 phone intercepts:
Dennis K. Berman, “The Game: Galleon’s Legacy: Wiretapping Insider Crime,”
Wall Street Journal
, May 12, 2011.
“We need a dirty call,” Goldberg said:
US v. Rajaratnam
, “A dirty call” is referenced in Franks hearing, Michaelson testimony, October 5, 2010.
Khan agreed to tape some telephone conversations:
US v. Rajaratnam
, Franks hearing, Michaelson testimony, October 5, 2010.
Khan’s consensually recorded call to Rajaratnam on January 14, 2008:
US v. Rajaratnam
, Franks hearing, Kang Exhibit 1, the affidavit in support of the application for authorization to intercept wire communications.
The next day Intel reported revenue up 10.5 percent:
Ibid.
Three days later, on January 17, 2008, Khan telephoned Rajaratnam:
Ibid.
“It should have at least been attempted”:
US v. Rajaratnam
, Franks hearing, Goldberg Exhibit 20, Email from Justice Department’s Michelle Swaney to Lauren Goldberg, March 3, 2008.
Kang’s attempt at physical surveillance and the reason he didn’t find Rajaratnam:
US v. Rajaratnam
, Kang wiretap affidavit.
“It’s a fairly apparent omission”:
US v. Rajaratnam
, Franks hearing, Goldberg Exhibit 20, Swaney email to Goldberg.
Rajaratnam approaching Kumar at the Indian School of Business fund-raiser about moonlighting:
In
US v. Rajaratnam
, Anil Kumar testified that Rajaratnam proposed paying him for his insights while they were walking out of a charity event. Kumar did not disclose the event, and told prosecutors he does not remember where the overture was made, but the author’s reporting indicates that the event was the ISB fund-raiser.
Rajaratnam’s anonymous contribution of $1 million:
US v. Rajaratnam
, Testimony of Anil Kumar, June 1, 2012.
Heard Rajaratnam had profited in the dot-com boom:
Ibid.
By 2001, the assets at Rajaratnam’s Galleon fund made it one of the ten biggest:
Katherine Burton and Saijel Kishan, “Raj Rajaratnam Became Billionaire Demanding Edge,” Bloomberg, October 19, 2009.
Kumar angling to get hired by Rajaratnam:
US v. Rajaratnam
, Testimony of Anil Kumar, March 10, 2011.
Of the view he would be named as successor to Puri as office manager:
US v. Anil Kumar
, Sentencing Memorandum submitted on behalf of Anil Kumar (hereafter Kumar sentencing memo), July 18, 2012. McKinsey says it can’t confirm Kumar was promised the position of India office manager.
Kumar didn’t have a practice group, so he decided to set up an e-commerce practice:
Kumar sentencing memo. McKinsey says it can’t confirm that Kumar didn’t have a practice group.
Bob Waterman’s accepting of stock from Genentech and the repercussions:
Interview with Bob Waterman, May 20, 2011.
Skilling’s observations on accepting equity for consulting work:
Emails from Jeffrey Skilling, March 31, 2002, and April 2, 2012.
Only 50 percent of fees could be taken in equity, and the committee would consider investments under $1 million:
George David Smith, John T. Seaman Jr., and Morgen Witzel,
A History of the Firm
(privately published by McKinsey in 2010), 402.
Kumar’s tech consulting practice would grow to 25 to 30 percent of the firm’s revenue:
Kumar sentencing memo.
The
New York Times
story:
David Leonhardt, “Big Consultants Woo Employees by Offering a Piece of the Action,”
New York Times
, October 22, 1999.
“
We don’t want the best talent”:
Ibid.
The 12 percent drop in gross revenue from the start of 2001 to end of 2002 and the 87 percent plunge in additional awards:
Smith, Seaman, and Witzel,
A History of the Firm
, 413.
New arrivals rose from about 20 percent a year to the mid-to-high 30 percent range in the late nineties:
Ibid., 404.
Compensation per partner is hardwired to two economic statistics:
Email from Jeffrey Skilling, March 7, 2012.
Between the mid-nineties and 2000, the ratio of directors to consulting staff increased to 1:17 from 1:12:
Smith, Seaman, and Witzel,
A History of the Firm
, 404.
Even as revenue grew by more than three and a half times, the partnership grew by two and a half times:
Ibid.
These numbers “suggest a HUGE increase in Director compensation”:
Email from Jeffrey Skilling, March 29, 2012.
McKinsey’s hiring practices and the number of acceptances it received in 2001:
Gupta’s taped remarks at Creativity and Personal Mastery class, taught by Srikumar Rao at Columbia Business School, April 2004.
“On the beach”:
Smith, Seaman, and Witzel,
A History of the Firm
, 414.
The firm began culling its ranks through more rigorous reviews:
Ibid.
Between 2001 and 2004, its consulting staff fell from a little over seventy-five hundred to a little over fifty-five hundred:
In
A History of the Firm,
Smith, Seaman, and Witzel put the exact drop from 7,631 to 5,638.
The change in Kumar’s fortunes at McKinsey with the rise of Ian Davis in 2003:
Author interviews and Kumar sentencing memo.
Davis had a PPE from Balliol College:
See http://www.balliol.ox.ac.uk/alumni-and-friends/news/newsletters/balliol-e-news-august-2011-issue-4.
Rajaratnam said he received about $100 million a year in so-called soft dollars:
US v. Rajaratnam
, Testimony of Anil Kumar, March 14, 2011.
Many big mutual funds like Fidelity stopped accepting soft dollars:
Anthony Guerra, “Hard Times for Soft Dollars,” Informationweek, January 24, 2006.
On September 26, 2002, Tom Stephenson sent an eighteen-page PowerPoint presentation:
US v. Rajaratnam
, Government Exhibit 2091, Attachment to email from Stephenson to Rajaratnam, September 26, 2002.
“Good meeting with Raj”:
US v. Rajaratnam
, Defense Exhibit 0015, Email from Stephenson to Kumar, Steve Klar, and Mike Nevens, September 26, 2002.
Kumar’s efforts to get Rajaratnam to engage McKinsey:
Described by Anil Kumar in his testimony in
US v. Rajaratnam
, March 10, 2011.
“You know you sent me that document” and subsequent exchange between Kumar and Rajaratnam:
Ibid.
Rajaratnam dictated the letter and Kumar typed it:
Ibid.