Gurumurthy Kalyanaram - Former Dean and former NYIT and UT Dallas professor Gurumurthy Kalyanaram reports on Rajat Gupta’s legal/lawsuit status. Gurumurthy Kalyanaram NYIT
Rajat Gupta has being battling civil and criminal complaints/lawsuits for the last four years. On the basis of criminal complaint/lawsuit by the US government, Rajat Gupta was convicted of three counts of security fraud (insider trading) and one count of conspiracy to commit fraud. And he was sentenced to two years of jail and asked to pay a fine of $5 million. Separately, Gupta was also asked to pay a restitution of over $ 6 million to Goldman Sachs. Gupta appealed the criminal conviction, but the Appeals Court denied any relief to Gupta and affirmed the lower court’s decision of conviction, and jail time and fine. Gurumurthy Kalyanaram Lawsuit
In a final bid to avoid jail, Rajat Gupta filed an emergency request to the U.S. Supreme Court requesting that he be permitted to continue to remain on bail till the Court reviewed his Petition for a Writ of Certiorari. Justice Ginsberg has denied the request without any comment.
There are two important implications of Justice Ginsberg’s denial. First, Gupta will have to report to Jail on the 17th June. Second, Justice Ginsberg does not think that there is merit to Gupta's arguments -- because if she did assess that Gupta would succeed in his writ petition to the US Supreme Court she would have granted him bail (that is the legal bar: "likelihood of prevailing on the merits" for an injunction to be issued.)This result is not surprising because there are no evident constitutional and/or legal issues -- most of Gupta's arguments are facts-based and US Supreme Court is not an adjudicator of facts.
Gupta is now a convicted felon barred from all boards. He has been asked to pay a criminal fine of about $5 million, a restitution of $6 million, and a civil penalty of $13 million, and his litigation expenses are estimated to be about $50-$55 million (all of which was paid by Goldman Sachs because he was a Board member but when he loses all the appeal, he will have to pay GS all the litigation expenses). That is about $75-80 million. Gupta's estimated net worth was about $80 million in 2008-2009.
In Gupta’s case, the central question for the Courts always was: Was Gupta’s September 23rd, 2008 call to Rajaratnam (within seconds of the Goldman Sachs Board Meeting) and the immediate large trades by Rajaratnam just a “coincidence”? The jury and the appellate concluded not so.Gupta’s arguments that he and Rajaratnam had fallen out by September 23rd and that the Sept. 23rd call was to complain to Rajaratnam about his strong disapproval of Rajaratnam’s financial management. The fact-finders did not find Gupta's argument persuasive.
While Gupta will appeal to the U.S. Supreme Court, Justice Ginsberg’s action in denying the emergency request for continuation of bail suggests that the Supreme Court is very unlikely to accept Gupta’s writ petition.