Chiesi Gets 30 Months|for Insider Trading


     MANHATTAN (CN) – Danielle Chiesi, one of the most colorful players in the Galleon hedge fund insider trading ring, was sentenced Wednesday to 30 months in federal prison for securities fraud.



     A former trader with New Castle Funds, Chiesi’s wiretapped phone calls captured her flirtatiously sweet-talking with ringleader billionaire Raj Rajaratnam, and commenting in another call that if her actions became known it would turn her into “Martha fucking Stewart.”
     “You put me in jail if you talk,” Chiesi said, according one transcript in her criminal complaint. “I’m dead if this leaks. I really am … and my career is over. I’ll be like Martha fucking Stewart.”
     She pleaded guilty to her role in the conspiracy in January.
     The U.S. Attorney’s Office said in June that every defendant of the dozens arrested in the Galleon hedge fund investigation has been convicted of securities fraud.
     Of the more than 40 Galleon co-conspirators, Chiesi sparked the most tabloid fodder, through tales of sex, drugs and stock market intrigue involving executives of some of the world’s most influential corporations.
     Her tale even inspired a noir-style description from Manhattan U.S. Attorney Preet Bharara.
     “For Danielle Chiesi, cultivating corporate insiders to gain an illegal trading edge was the ultimate elixir,” Bharara said in a statement. “She was the vital artery through which inside information flowed between captains of industry and billionaire hedge fund managers, and she reveled in the conquest.”
     Chiesi was smartly attired for her sentencing, wearing a pale pink dress with a V-shaped neckline exposing a pearl necklace that matched her earrings. Bangs of blonde hair covered her forehead, and the rest was tied in a bun behind her head.
     Brassy in wiretap recordings, she was nearly inaudible in her pleas for leniency, tearing up as she told the judge, “I know there’s a punishment for breaking the law.”
     One of the family members filling two rows of the courtroom cried along with her.
     Prosecutors wanted her to be incarcerated for nearly 4 years for what they called her “central and starring role” in the Galleon inside-trading ring.
     “She was on the front lines,” U.S. Attorney Andrew Michaelson said.
     Michaelson said that one inside tip that she provided about Advanced Micro Devices helped that company outperform the NASDAQ by 6 percent in a single day, corrupting the market.
     Chiesi’s attorney, Alan Kaufman, claimed that she had been manipulated by her boss Mark Kurland, who was also her lover for more than 20 years.
     “Dani was, and will say today that she still is in love with him,” her sentencing memo states. “She resists the idea that Kurland used her for his own purposes, and the truth of that long relationship is probably far more complicated than any of us can know.”
     Chiesi’s attorneys hoped that she would get a lighter sentence than Kurland, who was sentenced to 27 months in January 2010. Her sentencing memorandum claims that Kurland exploited Chiesi’s “toxic” relationships with men to get inside information.
     Those relationships figured prominently in the Galleon inside trading saga.
     During the Rajaratnam trial, co-conspirator Anil Kumar testified that he had been told Chiesi had an “intimate relationship” with a major player in the deal, Intel CEO Bob Moffat, and also extracted inside information from Hector Ruiz, CEO of Advanced Micro Devices.
     “Mark Kurland did not instruct her to have an affair with Moffat,” Michaelson said. “She did that herself.”
     In one wiretapped recording, Chiesi told Rajaratnam that Moffat is married with “four kids.” She called Moffat a “geeky type” and “not like, charismatic, like you are.” Chiesi referred to Rajaratnam as “babe,” “baby,” and “love” throughout the recordings.
     Kaufman added that inside trading did not comprise “the universe of Chiesi’s professional behavior,” adding that co-conspirator Ali Far said in one wiretap, “Every time Dani told us something, we lost money on it.”
     He urged Holwell to consider the “totality of Dani’s life and the good that she’s accomplished,” referring to the leniency letters written to the judge from a Vietnam veteran and a Connecticut neighbor diagnosed with leukemia.
     The daughter of one of Chiesi’s boyfriends wrote: “Danielle was the light at the end of a very dark tunnel” after her mother abandoned her.
     U.S. District Judge Richard Holwell praised the “support of a wonderful family,” but said, “The message to Wall Street has to be loud and clear.”
     The 30-month sentence was slightly below the guideline range, and includes 250 hours of community service.
     During the hearing, Kaufman also pleaded for leniency based on Chiesi’s mental health issues, which he declined to state in court out of respect for her privacy.
     Judge Holwell was not so discreet, inserting in the public record that he granted her some leniency due to her clinical diagnosis of borderline personality disorder.
     Tearful when speaking to the judge, Chiesi was all smiles after the hearing. She shook hands with the team of three prosecutors and an FBI agent, and tried to engage them in conversation for a considerable amount of time.
     Each prosecutor said, “Good luck, Ms. Chiesi.”
     She is to report to prison on Sept. 20.

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