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Rajaratnam v. United States

United States District Court, S.D. New York

March 3, 2017



          LORETTA A. PRESKA Senior United States District Judge.

         Before the Court is a motion to correct, vacate, and/or set aside the sentence pursuant to Title 28, United States Code, Section 2255, (Mot. Vacate, June 16, 2015, dkt. no. 354), and a motion for a writ of error coram nobis to vacate, reassess, and amend the order of forfeiture, (Mot. Writ of Error, June 16, 2015, dkt. no. 351), filed by Petitioner Raj Rajaratnam ("Petitioner" or "Rajaratnam"). The Government filed an omnibus memorandum in opposition to both of Petitioner's motions. (Opp., Oct. 5, 2015, dkt. no. 360). Petitioner replied, filing both a reply memorandum pursuant to 28 U.S.C. § 2255, (Reply Mot. Vacate, Nov. 6, 2015, dkt. no. 365), and a reply memorandum for a writ of error coram nobis. (Reply Mot. Writ of Error, Nov. 6, 2015, dkt. no. 364). Subsequent correspondence was filed to address Salman v. United States, 137 S.Ct. 420 (2016), a recent Supreme Court decision that is relevant to Petitioner's arguments in his § 2255 petition. (See dkt. nos. 368-372}.

         For reasons that follow, Petitioner's motions are denied.

         I. BACKGROUND

         On March 8, 2011, the Petitioner's trial commenced before Judge Richard Holwell. Petitioner was charged in a Superseding Indictment in fourteen counts. (Superseding Indictment, Jan. 20, 2011, dkt. no. 165). Counts One to Five charged Petitioner with conspiracies to commit securities fraud, with each conspiracy defined by the individual who allegedly passed the information to Petitioner. (Id. at ¶¶ 1-35). Counts Six through Fourteen charged Petitioner with substantive securities fraud in connection with some of the individual trades that were also the subjects of the conspiracy counts. (Id. at ¶¶ 36-41). The counts included: (1) leading a multi-year conspiracy with former and current employees of Galleon, including Adam Smith, to trade based on illegal tips from multiple insiders at public companies, (Count One)(id. at ¶¶ 1-7); (2) leading a multi-year conspiracy with Roomy Khan, a former Galleon employee, and exchanging illegal tips with Khan related to multiple stocks, including Polycom Inc. ("Polycom"), Hilton Hotel Corp. ("Hilton"), and Google Inc. ("Google"), (Count Two)(id. at ¶¶ 8-14); (3) leading a multi-year conspiracy with Rajiv Goel, an Intel Corp. ("Intel") executive, and trading based on illegal tips from Goel about Intel and Clearwire Corp. ("Clearwire"), (Counts Three, Six, Seven, & Fourteen)(id. at ¶¶ 15-21, 36-37, 40-41); (4) leading a multi-year conspiracy with Anil Kumar, a senior partner at McKinsey & Company, Inc. ("McKinsey"), and trading based on illegal tips from Kumar about Advanced Micro Devices, Inc. ("AMD"), ATI Technologies Inc. ("ATI"}, and eBay Inc. ("eBay"), (Counts Four & Thirteen)(id. at ¶¶ 22-28, 38-39); (5) conspiring with Danielle Chiesi, a portfolio manager at another hedge fund, and exchanging illegal tips with Chiesi relating to AMD, Akamai Technologies, Inc. ("Akamai"), and other companies, (Counts Five, Eight, Nine & Ten)(id. at ¶¶ 29-37); and trading based on material, non-public information he obtained from a source at PeopleSupport, (Counts Eleven and Twelve). (Id. at ¶¶ 36-37).

         At trial, the Government offered physical and testimonial evidence as to Petitioner's guilt, including: (1) wiretap recordings of Petitioner's phone conversation with Kumar, Goel, Smith, Chiesi, and others demonstrating that Petitioner schemed repeatedly to obtain and to trade based on inside information, (Opp. at 4); (2) testimony from Kumar regarding his agreement to provide Petitioner with multiple illegal tips, including tips related to AMD's acquisition of ATI in 2006, and Petitioner's elaborate schemes to conceal the bribes he paid to Kumar for those tips, (id.); (3) testimony from Goel regarding his agreement to provide Petitioner with multiple illegal tips relating to Intel's April 2007 earnings and Intel's 2008 investment in Clearwire, (id.); (4) testimony from Smith regarding his agreement to share inside information with individuals at Galleon including Petitioner and Petitioner's directives to conceal their crimes, (id.); (5) testimony from various executives at public companies and other firms relating to the confidentiality of the information Petitioner obtained from many sources, (id.); and (6) summary charts reflecting Petitioner's phone calls with sources of inside information and the extensive trading by Petitioner and others based on that information. (Id.).

         On May 11, 2011, the jury found Petitioner guilty on all fourteen counts. (Rajaratnam Trial Tr., May 11, 2011, at 5712-13). On October 13, 2011, Judge Holwell sentenced Petitioner to a term of 132 months imprisonment, to be followed by two years of supervised release. (Judgment, Oct. 25, 2011, dkt. no. 328). Judge Holwell also ordered Petitioner to pay a fine of $10 million, a $1, 400 special assessment, and forfeiture in the amount of $53, 816, 434. (Id.)

         On appeal, Petitioner advanced two arguments: first, Petitioner argued that the wiretaps capturing his illegal schemes should have been suppressed because the Government included material falsehoods or omissions in the relevant applications. (Appeal Br. at 33, 11-4416, dkt. no. 75). Second, Petitioner challenged Judge Holwell's instruction to the jury that it could convict Rajaratnam if the inside information was "a factor, however small, " in his trading decisions. (Id. at 56). Petitioner concedes that appellate counsel "did not challenge the trial court's instruction on 'knowledge' and 'benefit' or the sufficiency of the evidence of 'knowledge' or 'benefit.'" (Mot. Vacate at 12). The Court of Appeals affirmed Rajaratnam's convictions by opinion dated June 24, 2013. United States v. Rajaratnam, 719 F.3d 139 (2d Cir. 2013).

         II. Discussion

         A. § 2255 Habeas Petition

         i. Legal Standard

         It is well settled that a § 2255 petition is not a substitute for a direct appeal. United States v. Frady, 456 U.S. 152, 165 (1982); United States v. Vilar, 645 F.3d 543, 548 (2d Cir. 2011). A federal prisoner cannot use a § 2255 petition to litigate questions that could have been raised on direct appeal but were not. Sapia v. United States, 433 F.3d 212, 217 (2d Cir. 2005). Society's interest in repose of criminal judgments animates these procedural rules and compels their vigorous enforcement. See, e.g., Harrington v. Richter, 562 U.S. 86, 103 (2011)(discussing repose in the context of petitions for habeas corpus from state prisoners). Thus, where a petitioner has procedurally defaulted a claim by failing to raise it at a trial, sentencing, or on direct appeal, the claim may be raised through § 2255 only if petitioner "can first demonstrate either cause and actual prejudice, or that he is actually innocent." Bousley v. United States, 523 U.S. 614, 622 (1998)(internal quotations and citations omitted).

         The Supreme Court has instructed that "cause" should be construed narrowly. See Coleman v. Thompson, 501 U.S. 722, 752 (1991)(noting that "cause" arises only when it is "something external to the petitioner" which "cannot be fairly attributed to him"). Where a petitioner argues that the "cause" for the procedural default was a result of ineffective assistance of counsel, the petitioner must demonstrate that (1) counsel's representation fell below an objective standard of reasonableness and (2) there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceedings would have been different. Strickland v. Washington, 466 U.S. 668, 688, 694 (1984); United States v. Whitman, 115 F.Supp.3d 439, 445 (S.D.N.Y. 2015). Ineffective assistance of counsel claims include both the "cause" and "prejudice" prongs because the Strickland standard also requires a showing of prejudice.

         Habeas courts must "indulge a strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance." Strickland, 466 U.S. at 689. In reviewing allegations of deficient performance by appellate counsel, reviewing courts are instructed not to "second-guess reasonable professional judgments and impose on . . . counsel a duty to raise every colorable claim" on appeal. Jones v. Barnes, 463 U.S. 745, 754 (1983)(internal quotation omitted). When analyzing the objective reasonableness of counsel's performance, such performance "must be assessed in light of the information known at the time of the decisions, not in hindsight." Strickland, 466 U.S. at 680. Additionally, in attempting to demonstrate constitutional ineffectiveness by appellate counsel, "it is not sufficient for the habeas petitioner to show merely that counsel omitted a nonfrivolous argument, for counsel does not have a duty to advance every nonfrivolous argument that could be made." Mayo v. Henderson, 13 F.3d 528, 533 (2d Cir. 1994}. Instead, a habeas petitioner must establish that appellate counsel "omitted significant and obvious issues while pursuing issues that were clearly and significantly weaker." Id. "Strategic choices" made by appellate counsel "after thorough investigation of law and facts relevant to plausible options" are "virtually unchallengeable." Strickland, 466 U.S. at 690-91.

         In the event a petitioner cannot demonstrate "cause" for his procedural default, he or she can obtain review for his or her claim by showing "that a fundamental miscarriage of justice would result from a failure to entertain the claim." McCleskey v. Zant, 499 U.S. 467, 494-95 (1991). The Supreme Court has repeatedly emphasized that a "fundamental miscarriage of justice" results only when petitioner can establish "actual innocence." See Herrera v. Collins, 506 U.S. 390, 404 (1993)(referring to rule requiring "proper showing of actual innocence" as the "fundamental miscarriage of justice exception" and explaining the purpose of the exception is "to see that federal constitutional errors do not result in the incarceration of innocent persons").

         Furthermore, "'actual innocence' means factual innocence, not mere legal insufficiency." Bousley, 523 U.S. at 623. Accordingly, this narrow test is satisfied only when petitioner can demonstrate that his acts "have been ruled not to constitute criminal conduct." Underwood v. United States, 166 F.3d 84, 88 (2d Cir. 1999).

         ii. ...

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