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STRAUSS HAUER & FELDLLP
_________ Attorneys at Law
JOHNM. DOWD 2028874386Xax:2028874288 firstname.lastname@example.org
October 29, 2009
VIA HAND DELrVERY
The Honorable Frank Maas United States Magistrate Judge United States Courthouse
500 Pearl Street
New York, NY 10007-1312
Re: United Slates v. Raj Rajaratnam, et at.
Docket No. 09-MAG-2306
Dear Magistrate Judge Maas:
We respectfully submit this letter on behalf of our client Raj Rajaratnam to request a decrease in Mr. Rajaratnaru's bond to $25 million from its present $l 00 million amount and to request a modification of the conditions of his pre-trial release so as to permit his travel within the contiguous forty-eight states. Far from posing a risk offlight as the Govenunent has suggested Mr. Rajaratnarn looks forward to his clay in Court where he will be able to defend himself against these charges.
Undersigned counsel have conferred with the Govenunent, which does not consent to this request.
In the early morning of Friday, October 16,2009, Mr. Rajaratnam, the founder and Managing General Partner of Galleon Group, a New York-based hedge fund, was arrested on a federal complaint and charged with violations of the federal securities laws. He was presented near the close ofbusiness on the same day. At the presentment, the Government requested that Mr. Rajaratnam be detained prior to trial, contending that it had a "specific, very significant concern about flight risk." Tr. at 9:4 - 9:8. J
I "Tr." refers to the transcript of the initial presentment held before the Honorable Magistrate Judge Douglas F. Eaton on October 15,2009.
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AKIN G MP
STRAUSS HAUER & FELDLLP
______ "'IO'oeys al Law
Han. Frank. Maas October 29,2009 Page 2
The Court rejected the Government's request to detain Mr. Rajaratnam. Instead, the Court released him on a $] 00 million personal recognizance bond. Mr. Rajaratnam secured the bond by posting $2.5 million cash, personal property valued at $17.5 million, and the signatures of five co-signers, The Court further limited his movements to within 110 miles of New York City. At the time, the Court stated that it would be willing to reconsider these conditions in the fu.ture, indicating that the conditions were a provisional measure designed to "give the Government reasonable assurance that there will not be some sudden impulsive behavior" by Me Raiaratnam. Tr. at 38:5 - 38:] O.
The Government's concern about flight risk is unfounded, and, indeed, rests on a misunderstanding of the relevant facts. As a result, the onerous conditions currently imposed on Mr. Rajaratnam's release are in no way the least restrictive conditions to ensure his appearance at trial, as is required. See 18 U.S.c. § 3142(b). Far from having any intention to flee, Mr. Rajaratnam intends to defend vigorously against the Government's charges and to clear his name. Mr. Rajaratnam, a United St.ates citizen, has substantial and ongoing personal and professional ties to the United States and the local community that he has no intention of abandoning - including the presence of his entire immediate family and nearly $30 million worth of real estate. Finally, Mr. Rajaratnam remains actively engaged in the business of Galleon and is committed to assisting Galleon in its cooperation with law enforcement authorities while ensuring that Galleon's investors and employees are treated fairly and equitably in the course of winding down Galleon's business.
In determining the appropriate conditions for pre-trial release, the Court is required to set the least onerous set of conditions that will "reasonably assure the appearance of the person as required," and also not "endanger the safety of any other person or the community." 18 U.S.c. § 3142(b). In so doing, the Court must enforce the Bail Reform Act's "strong policy in favor of release on personal recognizance" or on an unsecured appearance bond. Id.; see also Wood v. United States, 391 F.2d 981, 983 (D.C. Cir. 1968) ("The Bail Reform Act creates a strong policy 111 favor of release on personal recognizance."). If a personal recognizance bond or an unsecured appearance bond will not reasonably assure appearance and safety the Court must impose "the least restrictive further condition" which will provide that reasonable assurance. United States v. Madoff, 586 F.Supp.2d 240,246 (S.D.N.Y. 2009) (citing 18 U.S.c. § 3J42(c)(I)(B».
In making this determination, the Court must weigh, inter alia: (1) the nature of the offense charged; (2) the weight of the evidence against the suspect; (3) the history and character of the person charged; and (4) the nature and seriousness of the risk to the community. 18 U.S.c. § 3142(g). Within the Second Circuit, the possibility that the defendant could inflict economic harm on the community does not constitute a cognizable danger to the safety of the community.
STRAUSS HAUER & FELDLLP
______ Attorneys at L"",
Hon. Frank Maas October 29,2009 Page 3
Madoff, 586 F.Supp.2d at 253 ("[C]oncem about future nonphysical harm to the community ha been primarily considered ... in the context of child pornography or drug trafficking charges."). "When the safety of the community is not an issue, then the bail conditions tum exclusively on the Government's showing by a preponderance of the evidence that the defendant is a tlight risk.
See United States v. Shakur, 817 E2d 189,200 (2d Cir, 1987). The Government has not and cannot make that showing here.
Mr. Rajaratnam's Extensive Ties to the United States and the Local Commu.nity
Mr. Rajaratnam is a fifty-two year-old citizen of the United States who, although born in Sri Lanka, has lived in the United States for nearly thirty years. In that time, Mr. Rajaratnam has established extensive and continuing familial and economic ties to the United States and the local community, which al1ay any concern that he is a flight risk.
Foremost among Mr. Rajaratnam's connections to the United States is his family. Mr.
Rajaratnarn's entire immediate family-including his wife of twenty-one years, his three minor children, his parents, his wife's parents, and his two brothers and two sisters-are all citizens residing here in the United States. Mr. Rajaratnam lives in an apartment that he owns in New York City with his wife and children. Mr. Rajaratnam also oversees care for his eighty-one yearold father and seventy-seven year old mother, who live with him in New York City and for whom he is financially responsible. Two of Mr. Rajaratnam's children attend school in New York City and his eldest currently attends college in the United States. Me. Rajaratnam's siblings, with the exception of one sister, all live in the United States? Mr. Rajaratnam's mother- and father-in-law are also United States citizens living in Maryland.
These extensive, strong, and deep family ties to the United States give Mr. Rajaratnam every incentive to remain in the United States and defend himself. Mr. Rajaratnam's loyalty to his family is deep-seated, and he comes from a culture in which commitment to one's family is of sacred importance. Mr. Raj aratnam could not even conceive of abandoning his dependent family by fleeing the country.
In addition to those extensive and strong family connections to the United States, Mr.
Rajaratnam owns real estate in the United States worth nearly $30 million, including an apartment in New York City valued at $17.5 million, a home in Connecticut valued at $10.5
2 One of Me. Rajaratnam's sisters lives temporarily in Singapore with her husband, who is a U.S. diplomat posted there. During the October 16, 2009 presentment hearing, the Government incorrectly stated that Mr. Rajararnam has a sister who lives in South Africa. She does not.
STRl\USS HAUER & FELDLLP
______ Attorneys at Law
Hon. Frank Maas October 29,2009 Page 4
million, and a condominium in Florida valued at $1.4 million. The idea that Mr. Rajaratnam would simply abandon those properties to avoid a trial that he is confident of winning is neither realistic nor credible.
Mr. Rajaratnam's professional life and identity is also anchored in the United States. Mr.
Rajaratnam spent the last seventeen years of his life building Galleon into one of the largest and most successful investment funds in the country. He voluntarily registered Galleon with the SEC at a time when other hedge funds were reluctant to do so, and he hired a Chief Compliance Officer to ensure the firm 's adherence to the law. Mr. Rajaratnam has no intention of abandoning Galleon and its employees, whose futures have been imperiled as a result of these charges. Indeed, he remains intensely focused on the business of Galleon. Gall.eon was, in a very real sense, the great work of Mr. Rajaratnaru's life, and he is committed to ensuring that Galleon winds down in a manner that is fair and equitable to the fund's investors. Mr. Rajaratnarn is equally dedicated to Galleon's 125 employees, whom he is actively helping to secure new employment while simultaneously defending his and the company's reputation against these charges and the related SEC civil complaint
In particular, since his arrest, Mr. Rajaratnam and his attorneys have worked closely with Galleon's Management Committee and its counsel to ensure that documents are preserved and that the Government's production requests are answered in a timely manner. In fact, among Mr. Rajaratnam's first actions upon returning to Galleon after his arrest was to order that all shredders be removed from the office and to direct that a document preservation notice be sent to all employees. He is committed to ensuring that company documents, which include meticulous trade records, internal communications and publicly-available investor information, are preserved, and, in fact is confident that those documents and others will acquit him of the charges of insider trading and restore the company's reputation.
Finally, Mr. Rajaratnam himself is an esteemed philanthropist and an established member ofthe local community. Over the last five years, Mr. Rajaratnam has given more than $20 million of his personal wealth to charities around the world, including a number of organizations based in New York City. In the aftermath of 911.1, Mr. Rajaratnam gave $750,000 to the Firemen's Fund. Mr. Rajaratnam is also a major donor to and, until recently, a member of the Board of Directors of the Harlem Children'S Zone, a non-profit organization dedicated to breaking the cycle of generational poverty for thousands of families in NewYork City.] Mr. Rajaratnam has al.so made substantial gifts to City Harvest, which seeks to end hunger in
3 Mr. Rajaratnam resigned from the board of directors following JUs arrest in order to avoid interfering with the important work of the Harlem Children'S Zone.
STRAUSS HAUER & FELOu.p
______ Attorneys;at Law
Hon. Frank Maas October 29,2009 Page 5
communities throughout New York City, and The Robin Hood Foundation, which partners with more than 240 of the best poverty-fighting nonprofit organizations in New York City to initiate and operate projects that meet community needs. Mr. Rajaratnam has also endowed a scholarship at the University of Pennsylvania for students from developing countries."
The Government's Suggestion that Mr. Rajaratnam Intended To Flee Is Mistaken
By contending that Mr. Rajaratnam poses a flight risk, the Government simply backhands those extensive ties with the United States - the very type of ties that have long been recognized in the law as refuting flight risk. More troubling is the Government's reliance on incomplete information to suggest that Mr. Rajaratnam intended to flee the United States on the morning of his arrest. In footnote ten to the criminal complaint, the Government notes that Mr. Rajaratnam purchased a plane ticket to London two days before his arrest, implying that Mr. Rajaratnam intended to flee.
That suggestion cannot survive a full review of the relevant facts. The trip referred to in the criminal complaint was planned weeks in advance for documented legitimate business and rersonal reasons and was well-known to his family and Galleon colleagues alike. The purposes of Mr, Rajaratnams trip to London were to attend the London Film Festival, where Today s Special, a film that he had helped finance, was being screened, and to meet with potential investors in a new Sri Lankan infrastructure fund that would have been registered on the London Stock Exchange. From London, Mr. Rajaratnam intended to travel to Geneva with his wife, who wished to celebrat.e her so" birthday in the city where Mr. Rajaratnam proposed to her nearly twenty-one years ago. Notably, as the Government acknowledges in the criminal complaint, Mr. Rajaratnam did book return tickets from Geneva to New York-a fact strikingly at odds with its flight theory. 5
Mr. Rajaratnam's Intent To Defend Against the Governm.ent's Charges
4 During the October 16, 2009 presentment hearing, the Government suggested, without elaboration, that Mr. Rajaratnam may pose a danger to the community. Such a charge should not be made by the Government without substantial foundation, and it offered none. Nor could it. The intimation is utterly lacking in any factual basis. As the Government itself acknowledges, Mr. Rajaratnam has no criminal history of any kind. And he has demonstrated for years his commitment to helping the neediest in his community.
5 The complaint also states that Mr. Rajaratnam placed a call to a family member at 3 :00 a.rn. on the morning of his arrest. The call was to his daughter, who had mistakenly dialed Mr. Rajaratnam from her cell phone while away at college around the same time.
AKIN G MP
5 T R AU 55 1"1 AU E R & FE L D I L P
______ Atlorneys at law
Hon. Frank Maas October 29,2009 Page 6
During the October 16,2009 presentment hearing, the Government repeatedly argued that Mr. Rajaratnam's risk of flight was high because of the purported strength of the Government's case. That ground for detention fails as well. This case is at its earliest stages, and the Government does not yet have the critical information that will place its current allegations in the proper context and dispel any allegation of criminal conduct. 6 Moreover, the strength of the Govenunent's evidence, which relies heavily on a single cooperating witness widely reported to be Roomy Khan, has been assailed in a series of recent articles published in the New York Times and Wall Street Journal. Investigative joumaJists have reported that Ms. Khan not only is a convicted felon, but also was adjudicated by a court in August 2009 to have fabricated evidence for a COUli proceeding. See Alex Berenson, "Financial Woes Plagued Galleon Informant," New York TImes (Oct. 22, 2009); Don Clark, "Alleged Informant Had History of Helping Galleon," Wall Street Journal (Oct. 23, 2009). None of those facts were disclosed t.o the COUli in the Government's criminal complaints, facts which certainly would have called int.o question the strength of the Government's case at the initial presentment. Mr. Rajaratnam is confident that, when all the relevant facts come to light, he will be exonerated. Far from intending to flee, Mr. Rajaratnam looks forward to defending himself and correcting the mistaken and unwarranted allegations against him.
Request for Reduced Bail and Modified Release Conditions
For the foregoing reasons, Mr. Rajaratnarn's current pre-trial release conditions are more onerous than necessary to ensure his appearance at trial. Mr. Rajaratnam therefore respectfully requests that his personal recognizance bond be reduced to $25 million, secured by $10 million in property or cash and five co-signers. A secured bond in this amount is more than sufficient to ensure Mr. Rajaratnam's appearance at trial and, indeed exceeds the amount of bonds imposed in much more serious cases. For example, Bernard Madoff - who had already confessed to defrauding investors of more than $18 billion, and who faced charges that could, and did, result in the equivalent of a life sentence - was released before trial on a $10 million secured bond. In contrast to Mr. Madoff, Mr. Rajaratnam is accused of insider trading that resulted in alleged gains of$16.829 million 1 and faces charges that could result, even by the Government's own reckoning, in no more than a ten-year sentence. Indeed, Magistrate Judge Eaton specifically noted, in initially setting bail conditions that, "frankly, if the pretrial officer reports that everything is going very well, then I think it would be logical to return a bit of the money." Tr,
6 For example, the Government did not serve Galleon with a subpoena for records until October 26, 2009.
1 See Criminal CompI. ~~ 30,39 49, 53(m), 61(1).
AKI G MP
STRAUSS Hf\UER & FELDLLP
______ Marneys a' La'''
Hall. Frank Maas October 29, 2009 Page 7
38:5 - 38:10. Mr. Rajaratnam has cooperated fully with the Pr trial Supervision Office and intends to continue to be fully cooperative going forward.
Mr. Rajaratnam also requests that the Court amend the restrictions on his movements to permit him to travel within the continental United States. Currently, Mr. Rajaratnam's movements are limited to within 110 miles from New York City, a limitation tha.t wa.s designed in part to allow him to visit his daughter in college. That strict geographic limitation is unnecessary, given Mr. Ra.jaratnam's deep ties to the United States and the New York area. More importantly, this restriction prevents Mr. Rajaratnam from travelling to visit undersigned counsel, whose principal offices are in Washington, DC, and also prevents Mr. Rajaratnam from accompanying his wife on visits to her elderly parents, who live in Maryland. In addition, Mr. Rajaratnam is considering a number of possible business options in connection with the winddown of Galleon, including a potential ac-quisition of Galleon by other interested parties that could preserve jobs for many Galleon employees. Mr. Rajaratnam would be better able to serve Galleon, its investors, and its employees ifhe were permitted to meet with potential acquirers anywhere within the continental United States.
Based on the foregoing, Mr. Rajaratnam is fully willing, able, and motivated to report to Court as requested in order to defend himself and he poses no risk of flight or any other concern warranting the current bail conditions. Accordingly, we respectfully request that his bail conditions be modified by reducing the bond to $25 million and permitting him to travel within the fort~-eight contiguous states, or such other?;esser itions thft Your Honor deems
otz, Jr. Samidh Guha
James E. Sherry
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