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Saturday, June 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Hedge Fund Billionaire Funded Terrorists, Tamil Tigers Victims Say

NEWARK (CN) - A recently arrested hedge fund billionaire sent millions of dollars to the Liberation Tigers of Tamil Eelam, with "the intent to advance the LTTE's terror campaign," victims of the Tamil Tigers allege in Federal Court. Families of 21 killed say Rajakumara Rajaratnam contributed his own money and organized Tsunami Relief Inc. to send money to the Tamil Rehabilitation Organization, "the largest fund-generating front organization for the LTTE."

The Tamil Tigers were founded in the 1976 by the late Vellupillai Prabhakaran, and waged war against Sri Lanka's Sinhalese majority. The group gained control of Northern Sri Lanka and built up an army of thousands, including squads of suicide bombers. The Tigers continued fighting despite a 2002 cease-fire agreement, seeking an independent state for Sri Lanka's Tamils, until Prabhakaran was killed this spring and the Tigers finally surrendered.

The plaintiffs say the Tigers received a substantial amount of funding from the co-defendant Tamil Rehabilitation Organization, a self-proclaimed "self-help organization for the Tamil Diaspora." The families say the so-called charity helped fund the "terrorist aims of the LTTE."

They say the charity opened a colony for Tamils in Sri Lanka in memory of a suicide bomber and handed out calendars with a photo of Prabhakaran on it. Money sent to the Tamil Rehabilitation Organization was used to assist in terrorist attacks, and to pay pension benefits of slain Tamil Tigers and the salaries of live ones, according to the complaint.

Defendants Rajakumara Rajaratnam and his father, Jesuthasan Rajaratnam gave substantial donations to the TRO U.S. branch, as individuals, through their family foundation and through defendant Tsunami Relief Inc., according to the complaint.

Rajakumara Rajaratnam founded Tsunami Relief in 2004 and, the plaintiffs say, directed it "to donate the money with the knowledge and purpose that it be funneled by TRO to LLTE to help LTTE carry out its campaign of bombings."

Jesuthasan Rajaratnam lobbied for the Tamil Tigers, according to the complaint, and has been indentified by LTTE operatives "as a source for money used to bribe U.S. officials in connection with LTTE's attempts to remove LTTE from the U.S.'s list of Foreign Terrorist Organizations."

The plaintiffs say they either lost family members or were injured in 5 Tamil Tiger bombings in 2007-2008. This included two bus bombings, a railway station suicide bombing, a suicide bombing at the beginning of a Kanthi Stadium marathon race and a parcel bombing at the "No Limit" clothing store in a suburb of Colombo. They seek monetary damages, alleging crimes against humanity, and are represented by Joseph DePalma with Lite DePalma.

Here is Courthouse News' Oct. 19 story on the indictment of Raj Rajaratnam.

Hedge Fund Indictments Feature

Colorful Transcripts of Wiretaps

Barbara Leonard

WHITE PLAINS, N.Y. (CN) - Billionaire hedge fund trader Raj Rajaratnam milked friends and business acquaintances for inside information on deals from which he and his firm Galleon Management made tens of millions of dollars, federal prosecutors say. A second indictment accuses Danielle Chiesi and Mark Kurland, of New Castle Funds, and IBM senior vice president Robert Moffatt of related inside trading. Transcripts from wiretaps in this 27-page indictment are particularly colorful.

Rajaratnam and codefendants Rajiv Goel and Anil Kumar are accused of conspiring to trade more than 6 million shares of Advanced Micro Devices, Hilton, Google and other companies.

This 34-page indictment too includes wiretap transcripts. They pale, however, before the transcripts in the Chiesi complaint, which often appear to have come from a grade B movie.

Prosecutors say they used months of wiretaps and secret cooperating witnesses to expose the largest insider-trading ring in history.

According to the transcripts, Chiesi, a trader with the New Castle division of Bear Stearns Asset Management, said that without the insider information she wouldn't have touched stocks belonging to troubled Advanced Micro Devices with "a fucking 10 foot pole."

The transcripts appear to show that Chiesi knew the scheme was illegal because she constantly emphasized the importance of speaking on secure lines and not using e-mail.

"You put me in jail if you talk," according to the transcript of one conversation. "I'm dead if this leaks. I really am ... and my career is over. I'll be like Martha fucking Stewart."

In an affidavit, FBI Special Agent Diane Wehner lays out a series of nonpublic deals that tech company officials allegedly leaked to Chiesi, who shared the information with Kurland. The transcripts do not indicate what Moffat, the IBM executive got in exchange for information he allegedly leaked to Chiesi about an AMD deal to which he was privy because the company needed to license IBM technology.

Chiesi had New Castle buy 127,600 shares of AMD, worth $2.3 billion, in the weeks before the announcement that the tech company would spin off its manufacturing division with financing help from Abu Dhabi investors.

Chiesi allegedly assured Kurland, a former senior managing director of Bear Stearns, that Moffat would let her know when the deal would go down. The transcript from one call reports that she tells him she will see Moffat "on fucking Sunday at my mom's house."

AMD shares went up by 25 percent after it announced the spinoff, though the affidavit says it was not actually a profitable deal because the sour economy had caused shares to drop 28 percent while Chiesi was buying up her stake.

Chiesi worried that if AMD stock increased by 30 percent she "could get fucked" because her profitable trading would attract attention from regulators. Hedge fund mogul Raj Rajaratnam advised her to establish a trading pattern and sell off half the AMD stock before the "unbelievable" announcement, according to the complaint.

Calls intercepted from July to September 2008 allegedly show Rajaratnam and Chiesi speaking repeatedly about using confidential information to trade shares of tech companies that include IBM, Akami and Sun Microsystems.

Moffat allegedly tipped Chiesi to IBM's unannounced earnings reports and its plan to acquire Sun - two events that caused stocks to jump and produce $1.4 for New Castle accounts. Chiesi earned more than $2.4 million from the inside trading, according to the complaint.

In the Rajaratnam complaint, codefendant Kumar is a director at McKinsey & Co.; Goel is a managing director at Intel Capital, an Intel subsidiary.

The SEC filed a separate complaint against all six individuals, Galleon Management and New Castle Funds.

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