Andrew Kelly/ReutersZvi Goffer received a 10-year sentence, among the longest insider trading sentences ever.
Two of the more colorful characters caught in the government’s vast insider trading investigation were sentenced on Wednesday, three weeks before its central figure — Raj Rajaratnam — was set to learn his fate.
Zvi Goffer, a former hedge fund trader, received a 10-year sentence from Judge Richard J. Sullivan in Federal District Court in Manhattan, among the longest insider trading sentences ever.
“This will be used to send a message to Wall Street,” Judge Sullivan said. “These crimes are not going to be tolerated.”
Three hours later, in the same courthouse, Winifred Jiau, a former technology industry consultant, received a four-year term from Judge Jed S. Rakoff.
Insider trading, said Judge Rakoff, “strikes at the integrity of the marketplace, which is a very important asset of the United States.”
Wednesday’s proceedings served as something of an undercard for the main event — the sentencing of Mr. Rajaratnam, the former head of the Galleon Group hedge fund whom the government calls “the modern face of insider trading.” Mr. Rajaratnam’s sentencing before Judge Richard J. Holwell, originally scheduled for Sept. 27, was pushed back without explanation on Wednesday to Oct. 13.
Federal prosecutors have asked the judge to sentence Mr. Rajaratnam to up to 24 years, a term that would be the longest insider-trading sentence ever.
Like Mr. Rajaratnam, both Mr. Goffer and Ms. Jiau fought the government’s charges, took their cases to trial and lost.
Mr. Goffer, who briefly worked at Galleon under Mr. Rajaratnam, was convicted of leading an insider trading ring that earned millions of dollars in illegal profits by receiving advanced word of big mergers from corporate lawyers. Ms. Jiau, a consultant for the Silicon Valley expert network firm Primary Global Research, was found guilty of leaking secret information about technology companies to hedge fund traders.
The United States attorney in Manhattan has brought insider trading charges against 54 people, 44 of whom have pleaded guilty. All six defendants who have taken their cases to trial have been convicted.
The prison terms handed down on Wednesday highlighted the disparate approaches that judges take to sentencing, and could offer some insight into the sentencing of Mr. Rajaratnam.
In the case of Mr. Goffer, his 10-year sentence was effectively at the low end of the recommended range suggested by nonbinding federal sentencing guidelines. In the case of insider trading crimes, the guidelines are largely based on the dollar amount of the illegal gains. The government had suggested a range of 121 to 151 months for Mr. Goffer.
Ms. Jiau, however, was sentenced to four years in prison, a term well below the range of six and a half to eight years suggested by the guidelines. Judge Rakoff has long been a critic of the guidelines.
“There’s no way I’m going to impose a guideline sentence in this case,” Judge Rakoff said. “The guidelines give the mirage of something that can be obtained with arithmetic certainty.”
The proceedings also illustrated judges’ different approaches in sentencing defendants who take their cases to trial versus defendants who plead guilty and cooperate with the government. Judges have shown leniency in sentencing insider trading defendants who have admitted wrongdoing. Under the guidelines, defendants can shave time off their sentences if they accept responsibility for their crimes.
Judge Sullivan told Mr. Goffer that there were negative consequences to fighting the government’s charges and not accepting responsibility until after the fact. “You decided to gamble with your future,” the judge said. “And you lost.”
In contrast, Judge Rakoff said during Ms. Jiau’s proceeding that it was important not to draw a negative inference from a defendant who went to trial.
“Every American has the right to put the government to its proof,” said Judge Rakoff. “Even though we want to give credit for acceptance of responsibility, we don’t want to place such a premium on it that we discourage people from exercising their constitutional rights.”
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