No new trial, rules US court.
By Deepak Chitnis
WASHINGTON, DC: A US appeals court has upheld the verdict against Rajat Gupta, the former Managing Director of McKinsey & Company, who was convicted on charges of insider trading last year.
Gupta has been free on $10 million bail since being found guilty last July on three counts of securities fraud and one count of conspiracy, which landed him a sentence of two years behind bars, one year of additional supervision upon release, and a $5 million fine. That bail agreement was only in effect until the end of the appeals process, which came to a close on Tuesday.
In upholding the verdict, the US Court of Appeals for the Second Circuit has shut down Gupta’s appeal process, and effectively closed the door on any hope the disgraced hedge fund manager may have had at having the original judgment overturned. The court order called Gupta’s appeal “without merit.”
Gupta and his litigation team have argued that the evidence against him – which consists mainly of wire-tapped phone calls between Gupta and Raj Rajaratnam, who is currently behind bars – is nothing more than hearsay, and that this evidence was unfairly introduced during Gupta’s original trial, influencing the jury to incorrectly pass a guilty verdict.
But the appeals court disagreed, finding the circumstantial evidence to be compelling enough that they would now not allow a full new trial for Gupta. The courts also refused to hear “state of mind” testimony from Gupta’s daughter, Geetanjali, which Gupta’s lawyers believe would have vouched for how angry Gupta was after allegedly being duped by Rajaratnam into giving him privileged trading information.
Gupta still has a separate appeal case, which is still live, involving an amended restitution amount of $6.22 million for his criminal malfeasance. There is also a separate civil ruling that demands Gupta pay $13.9 million for his insider trading crimes, brought upon him by the Securities and Exchange Commission (SEC).
The original court ruling mandated that Gupta can never serve as the director of a publically traded company for the rest of his life.
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