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From lofty board room to lowly cell: Rajat Gupta begins prison term

Last updated on: June 18, 2014 10:03 IST

Image: Former Goldman Sachs Group Inc board member Rajat Gupta (R) departs Manhattan Federal Court with his lawyer, Gary Naftalis (L) after being sentenced in New York, October 24, 2012.
Photographs: Lucas Jackson/Reuters Yoshita Singh in New York

Rajat Gupta, a one-time poster boy of Indians in America and former Goldman Sachs Director, on Wednesday began his two-year prison sentence after fighting a protracted legal battle to clear his name in one of the biggest insider trading schemes in US history.

The sixty-five-year-old Gupta, once regarded as among the most powerful and influential Indian-Americans on Wall Street, began serving his jail term at a minimum security satellite camp of the Federal Medical Center-Devens in Ayer, Massachusetts.

Incidentally Gupta's camp, which currently has 132 inmates, is next to the medical centre where his one-time friend and business associate hedge fund founder Raj Rajaratnam is serving his 11-year prison sentence for running the massive insider trading scheme.

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From lofty board room to lowly cell: Rajat Gupta begins prison term

Image: Rajat Gupta.
Photographs: Reuters

Gupta was convicted in 2012 following a jury trial of passing confidential information about Goldman Sachs to Rajaratnam minutes after he learned about them at the board meetings.

He was sentenced to two years in prison, ordered to pay $5 million in fine and a separate $6 million in restitution to Goldman Sachs.

Gupta was last year also ordered to pay a hefty $13.9 million civil penalty and permanently barred from acting as an officer or director of a public company for spilling boardroom secrets.

Gupta on Tuesday told a US court that he should not be required to pay the $13.9 million in civil penalties since he already has to pay over $11 million in criminal fines.

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From lofty board room to lowly cell: Rajat Gupta begins prison term

Image: Rajat Gupta (2nd R) leaves Manhattan Federal Court with his lawyer, Gary Naftalis (R).
Photographs: Lucas Jackson/Reuters

The IIT-Delhi and Harvard alumnus arrived at the prison facility and started the routine medical tests.

The medical tests will take a day to be completed, following which Gupta will be lodged in the satellite camp.

According to initial information available on the facility's website, Gupta has been described as a 65-year-old ‘Asian, male.’

According to the camp's rules, Gupta will be able to receive family and friends on Saturdays, Sundays and federal holidays between 8:30 AM to 3:00 PM while on Fridays between 2:30 pm and 8:30pm.

Normally, only five visitors, including children, are allowed to visit an inmate at any given time.

. . .

From lofty board room to lowly cell: Rajat Gupta begins prison term

Image: Rajat Gupta.
Photographs: Reuters

A report last week in the New York Times had quoted retired Bureau of Prison's Correctional Treatment Specialist Jack Donson as saying that Gupta could serve approximately 85 per cent of his two-year sentence before becoming eligible for transfer to a halfway house prior to his release date.

Although the statutory maximum halfway house is 12 months, white collar offenders with family and financial resources can expect a minimal amount of halfway house placement or direct home detention.

"Based on that, Gupta could be back home by the end of 2015.

“When Gupta reports to Devens, he will have fought his conviction and efforts to stay out of prison for a longer period of time than he will even be in prison" Donson said.

The prison term is the final nail in the coffin for Gupta, who rose to stellar heights in corporate America and became the poster boy of the Indian-American success story.

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From lofty board room to lowly cell: Rajat Gupta begins prison term

Image: Galleon hedge fund partner Raj Rajaratnam is escorted by FBI agents after being taken into custody.
Photographs: Brendan McDermid/Reuters

At 45, he became the first Indian CEO of the consulting giant McKinsey.

He co-founded the prestigious Indian School of Business with fellow McKinsey executive Anil Kumar, who had pleaded guilty to insider trading and testified as a government witness against Gupta in his trial.   

Gupta was also involved with various philanthropic causes, a side that the defence tried to portray at the trial using character witnesses.

Nearly 200 supporters, including influential names like Reliance Industries Chairman Mukesh Ambani, Microsoft co-founder Bill Gates and former UN Secretary-General Kofi Annan, wrote letters to the trial judge asking him to show leniency when he sentenced Gupta for insider trading.

He had been fighting with all his might to reverse his insider trading conviction and avoid going to jail.

His trial lawyer was renowned defense attorney Gary Naftalis and his appeal was fought by former United States solicitor general Seth Waxman.

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