July 15, 2024

DealBook: Danielle Chiesi’s Lawyers Seek Leniency, Blaming a Love Affair

Danielle S. Chiesi, the former beauty queen turned convicted Wall Street trader, deserves a light prison sentence because her crimes were the result of a tortured love affair with her boss, her lawyers said.

A lawyer for Ms. Chiesi laid out his case for leniency in a court filing late Monday that at times read more like a Harlequin romance novel than it did a legal brief.

“The punishment due for the conduct at issue here should be mitigated once it is recognized as the manifestation of the psychological and emotional forces impacting on Danielle Chiesi, rather than the result of greed and venality,” said Alan R. Kaufman, the lawyer.

Federal prosecutors countered the defense’s argument by calling Ms. Chiesi the “consummate Wall Street insider” who engaged in a “broad and far-reaching” criminal scheme. They asked Judge Richard J. Holwell to sentence her to as many as three years and 10 months in prison. Her sentencing is set for June 30.

Ms. Chiesi pleaded guilty in January to participating in an insider trading conspiracy with Raj Rajaratnam, the Wall Street investor who was found guilty by a jury last month.

Her lawyers blamed her actions in part on Mark Kurland, her boss at New Castle and lover for almost 20 years. Her “emotional and financial well-being were inextricably linked with Kurland,” her lawyer said.

Mr. Kurland pleaded guilty to insider trading crimes in January 2010 and was sentenced to 27 months in prison. Ms. Chiesi’s lawyers argued that her sentence should be less than that.

Ms. Chiesi began dating Mr. Kurland in 1988 when she was a 22-year-old saleswoman at Mabon Nugent, a brokerage firm where Mr. Kurland, then 40 years old, was an executive, according to the court filing. The married Mr. Kurland moved to Bear Stearns, where he became chief executive of its asset management business and later started New Castle, the bank’s hedge fund. He hired Ms. Chiesi in 1996.

Ms. Chiesi’s lawyers said that although Ms. Chiesi trafficked in inside information from corporate tipsters while at New Castle, she never paid for information and never traded in her own account. She instead shared it with Mr. Kurland, her lawyer said.

“The dozens of recorded conversations between Ms. Chiesi and Mr. Kurland are replete with examples of Kurland encouraging her to get information, of Kurland belittling her ability to analyze financial data, of Kurland being the New Castle decision maker regarding investment decisions,” Mr. Kaufman said.

“Dani was, and will say today that she still is in love with him,” he said. “She resists the idea that Kurland used her for his own purposes, and the truth of that long relationship is probably far more complicated than any of us can know.”

A former boyfriend of Ms. Chiesi’s referred to only as “Billy” apparently claims to know. Quoting a letter from Billy submitted to the judge, her lawyer said that Mr. Kurland engaged in a “vicious cycle of abuse” and “psychological exploitation” to turn Ms. Chiesi into his “virtual servant.”

A lawyer for Mr. Kurland did not return requests for comment.

Ms. Chiesi used her sexuality to gain an investment edge on Wall Street, engaging in affairs with other sources. She had an intimate relationship with Robert Moffatt, a former I.B.M. executive who is serving prison time after admitting to leaking confidential information to Ms. Chiesi.

During one wiretapped phone conversation played during Mr. Rajaratnam’s trial, Ms. Chiesi told Mr. Rajaratnam that pumping corporate insiders for secret information excited her.

“It’s a conquest,” she said. “It’s mentally fabulous for me.”

Federal prosecutors dismissed the idea that Ms. Chiesi was controlled by her boss or anyone else. “Chiesi operated largely on her own, and she was sufficiently experienced and sophisticated that she knew precisely what she was doing,” the government said in its filing. “In short, she was not merely Kurland’s minion.”

Article source: http://feeds.nytimes.com/click.phdo?i=0322624442e5df078faed92a0f8d2fa4

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