This pirate is sunk.
The fat-cat founder of Wall Street hedge-fund giant Galleon — one of the world’s richest men — looked more knee-buckling than swashbuckling as he and a crew of five investment and corporate big shots were charged with scamming $20 million in illicit booty through insider trading.
Raj Rajaratnam, 52, was arrested at his mammoth Upper East Side condo before he could flee to London, to where he had booked a flight after learning that a former employee had been “wearing a wire,” a criminal complaint says.
“Raj Rajaratnam is not a master of the universe, but rather a master of the Rolodex,” said Robert Khuzami, director of enforcement at the Securities and Exchange Commission.
“He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity.”
Magistrate Douglas Eaton set a $100 million bond for Rajaratnam — whom Forbes recently listed as the world’s 559th richest person with a net worth of $1.3 billion. He was expected to be released last night but was told he must come up with a “significant” amount of the cash by next week.
The feds said the Sri Lankan native was the ringleader of an insider-trading scam that included two former hedge-fund managers from Bear Stearns and executives from IBM and McKinsey & Co.
Officials called it the largest hedge-fund insider-trading case in history — and the first time they had used wiretaps to go after dirty traders.
Manhattan US Attorney Preet Bharara said the busts should serve as a “wakeup call to Wall Street” that investigators are now going after financial crimes with the “same investigative techniques that have worked so successfully against the mob and drug cartels.”
Rajaratnam’s lawyer, Jim Walden, said his client is innocent and ready to fight the charges. He insisted prosecutors “misunderstand words like ‘use your Rolodex’. . . because they don’t understand the business.”
The arrests came after a three-year probe prompted by an SEC tip about “suspicious” trading. That investigation was helped by a cooperating witness who had known Rajaratnam since the 1990s, court papers say.
The former employee approached the Galleon Management head in 2005 about going back to work for him, and Rajaratnam asked him to identify companies where he had an “edge,” the filings say.
The witness passed inside information about Google — info that netted Rajaratnam and Galleon more than $9 million in profits, the filings say.
The informant began working with the feds in November 2007 and investigators began tapping Rajaratnam’s cellphone on March 7, 2008.
Other alleged members of the ring include Danielle Chiesi and Mark Kurland of New Castle Funds, a former Bear Stearns Asset Management hedge fund; Rajiv Goel, a director at Intel Capital, the investment arm of Intel Corp.; Anil Kumar, a director at consulting giant McKinsey & Co.; and Robert Moffat, a senior vice president at IBM.
Rajaratnam, Goel, 51, Kumar, 51, and Chiesi, 43, were charged with securities fraud and face up to 20 years in prison if convicted. Moffat, 53, and Kurland, 60, were charged with conspiracy to commit securities fraud and face up to five years in prison.
Moffat’s lawyer, Kerry Lawrence, said, “He’s shocked that he was charged with a crime and looks forward to resolving the case favorably.”
Kumar’s lawyer, Isabelle Kirshner, said her client was “distraught.”
Additional reporting by Dareh Gregorian, Kaja Whitehouse and Post Wire Services
Who’s Who:
Raj Rajaratnam, 52
Rajaratnam is the richest son of Sri Lanka. His $1.3 billion fortune puts him at No. 559 on Forbes’ list of the world’s richest people, 236th among Americans.
Until his arrest, he was having a good year — his hedge funds in the Galleon Group had returned 20 percent.
After graduating from a prestigious Sri Lankan school, Rajaratnam studied engineering at the University of Sussex in England.
He moved to the US in 1981, enrolling in the Wharton School of Business at the University of Pennsylvania, where he got an MBA in 1983.
He began his career as a securities analyst and founded Galleon in 1997.
Rajaratnam, an Upper East Side resident, has given more than $100,000 to Democratic politicians, including Sen. Charles Schumer and then-Sen. Hillary Rodham Clinton. He also donated $30,800 to a PAC that backed President Obama last year.
He is a dual citizen of the US and Sri Lanka.
Anil Kumar, 51
Kumar, of Santa Clara, Calif., is a director at McKinsey & Co. Inc., a management-consulting firm. A top expert on outsourcing research work overseas, he’s accused of providing insider information about McKinsey clients.
Mark Kurland, 60
Kurland, of New York, is a general partner at New Castle Funds LLC, a top hedge fund. He was a top executive at the firm for years when it was part of Bear Stearns Asset Management.
Robert Moffat, 53
Moffat, of Ridgefield, Conn., is a senior vice president at IBM, where he’s worked for 31 years. He’s the chief of IBM’s systems and technology group and oversees its sales of computer hardware.
Rajiv Goel, 51
Goel, of Los Altos, Calif., is a director of strategic investments at Intel Capital, the investment arm of chip- maker Intel Corp. He provided inside information about Intel investments to Rajaratnam, the feds say.