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6 Jan 2010

Fed Doubles Rajaratnam Hedge Fund Allegations

New York ( - U.S. prosecutors yesterday filed papers saying Raj Rajaratnam’s profits in the alleged Galleon hedge fund scheme are higher than previously thought. Federal prosecutors doubled the sum to $36 million from the previous allegations of $17 million in fraudulent income. Prosecutors also opposed Rajaratnam’s bid for reduced bail.

The investigation started with suspicions in the 1990s when chip maker Intel Corp alleged that Rajaratnam was receiving tips from an Intel insider. The investigation was based on a witness who had first entered into a plea agreement with the United States before she began to cooperate in an investigation into Rajaratnam's practices.

Rajaratnam was taken into custody in New York on Oct. 16, 2009 in the USA's largest hedge fund insider-trading scheme. His bail was set at $100 million, Rajaratnam said in regard to the charges, that, "they are, without exception, entirely baseless. I am innocent and will vigorously defend myself and our firm."

Rajaratnam was hailed a hero in post-tsunami Sri Lanka, now however, his massive donations are being called into question.

Rajaratnam is a U.S. citizen and the most prominent defendant among 21 people criminally or civilly charged in an insider trading case involving employees of some of America's best-known companies, according to Bloomberg, including International Business Machines Corp, McKinsey & Co and Intel Capital, an arm of Intel Corp.