First jail term in Galleon insider trading case

May 23, 2010 | By Jim Kim

Are the dominoes now poised to fall? Mark Kurland--co-founder of New Castle Partners hedge fund (hedge fund news) in Manhattan, who had pleaded guilty to conspiracy to commit securities fraud and securities fraud--was sentenced Friday to two years and three months in prison and ordered to forfeit $900,000 in ill-gotten gains.

He thus became the first person sentence in the Galleon hedge fund insider trading scandal (scandal news), the center of which is Raj Rajaratnam. His plea for probation was roundly rejected by a judge who excoriated his activity. Kurland, who was the boss of Danielle Chiesi at one point, did not cooperate with the government, and it will be interesting to see how defendants who choose to cooperate will be treated.

So far, 11 people who have pleaded guilty in the case. Others, those who had agreed to cooperate with the government, have yet to be sentenced, notes the AP. They are hoping for lenient treatment. But that is a bit of a wild card in the wake of the Frank DiPascali decision. He was Bernard Madoff's (Bernard Madoff news) long-time CFO and was relying on assurances from prosecutors that his cooperation would keep him out of jail, but a judge threw him in prison despite the objections of stunned government lawyers.

For more:
- here's the AP article