Nailed for Insider Trading, but Not Ditched by Antipoverty Pioneer

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Last week, Raj Rajaratnam was sentenced to 11 years in federal prison for conspiracy and securities fraud in what Manhattan’s U.S. attorney called “the largest hedge fund insider trading scheme in history.” While his sentence was the longest ever handed down for insider trading, the judge cited Rajaratnam’s charitable work in ordering less hard time than prosecutors had asked for.

Many of Rajaratnam’s past good works involved the Harlem Children’s Zone—the famous, cradle-to-college antipoverty program founded by Geoffrey Canada in 1994. Prior to his legal trouble, Rajaratnam was a member of HCZ’s board.

After Rajaratnam’s conviction last week, a check of his court file revealed a letter (click here or see below) sent in July by Canada to the judge who was weighing what sentence to impose.

“I understand it is your responsibility to sentence him for his convictions, and I hope you will consider his incredible talent and the benefits he can provide to our organization and our children in your deliberations,” Canada wrote. He went on to describe Rajaratnam’s contributions—financial and otherwise—to HCZ in the past, and to outline in detail five HCZ programs that Rajaratnam could have assisted.

Some (including City Limits and the Brookings Institution) have questioned whether the HCZ approach, which President Obama has tapped as the model for his Promise Neighborhoods antipoverty initiative, is successful and replicable enough to warrant a national roll-out. But no one questions Canada’s personal commitment to the cause—nor his loyalty to a friend: After the arrest, Canada guaranteed part of Rajaratnam’s bail, and he was a character witness for the defense during Rajaratnam’s trial earlier this year.

Letter from HCZ founder on behalf of Raj Rajaratnam

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