PDF: U.S. Department of Justice Letter

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U.S. Department of Justice
By Hand Delivery
The Honorable Denny Chin
United States Circuit Court Judge
United States Courthouse
500 Pearl Street
New York, New York 10007
Re: United States v. Anil Kumar,
10 Cr. 13 (DC)
Dear Judge Chin:
United States Attorney
Southern District of New York
The Silvio J. Mollo Building
One Saint Andrew’s Plaza
New York, New York 10007
July 16, 2012
The Government respectfully submits this letter to
advise the Court of the pertinent facts concerning the
substantial assistance that defendant Anil Kumar has rendered in
the investigation and prosecution of other persons. In light of
these facts, the Government moves, pursuant to Section 5K1.1 of
the Sentencing Guidelines, that the Court sentence the defendant
in light of the factors set forth in Section 5K1.1(a)(1)-(5) of
the Guidelines.
On or about January 7, 2010, Kumar pleaded guilty to
Counts One and Two of the above-captioned Information. Count One
of the Information charged Kumar with conspiring with other
individuals to commit securities fraud, in violation of Title 18
United States Code, Section 371, in connection with a scheme to
engage in insider trading from in or about 2004 through in or
about 2009. This charge carries a maximum sentence of five
years’ imprisonment, a maximum term of three years’ supervised
release, a maximum fine, pursuant to Title 18, United States Code
§ 3571, of the greatest of $250,000, twice the gross pecuniary
gain derived from the offense, or twice the gross pecuniary loss
to a person other than the defendant as a result of the offense,
and a mandatory $100 special assessment.

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Count Two of the Information charged Kumar with
securities fraud, in violation of Title 15, United States Code
Sections 78j(b) and 78ff, and Title 18, United States Code,
Section 2, in connection with a scheme to defraud by engaging in
insider trading with respect to shares of Advanced Micro Devices
Inc. (“AMD”). This charge carries a maximum sentence of 20
years’ imprisonment, a maximum term of three years’ supervised
release, a maximum fine of $5 million, and a mandatory $100
special assessment.
I. Kumar’s Background
From approximately 1986 through on or about November
30, 2009, Kumar worked at McKinsey & Company ("McKinsey"). Kumar
worked initially as an associate, then a project manager, then a
junior partner, and then a senior partner or director. McKinsey
fired Kumar shortly after his arrest on or about October 16,
2009.
On or about October 16, 2009, Kumar, Rajaratnam, and
others were arrested by complaint on charges of insider trading.
II. Kumar’s Criminal Conduct
1. Kumar’s Illegal Agreement With Rajaratnam
From in or about 2004 through in or about 2009, Kumar
repeatedly violated his fiduciary and other duties of
confidentiality to McKinsey and its clients by disclosing secret
information to Rajaratnam in exchange for money, friendship, and
the prospect of future business opportunities. Kumar understood
that Rajaratnam was trading based in part on Kumar’s information
and that Kumar was violating the law by disclosing the
information to Rajaratnam.
Kumar became friends with Rajaratnam at the Wharton
School of the University of Pennsylvania in or about 1982. From
in or about 1983 through in or about 1993, Kumar kept in touch
with Rajaratnam while Rajaratnam worked at Needham & Company as a
technology analyst. From in or about 1993 through in or about
1999, Kumar worked for McKinsey in India and lost touch with
Rajaratnam. After Kumar returned to the United States, in or
about 2001, Kumar asked Rajaratnam to contribute money to the
Indian School of Business. Kumar and Rajat Gupta co-founded the
Indian School of Business and were raising money for the school.
In response, Rajaratnam made an anonymous $1 million

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contribution, and Kumar informed Gupta about Rajaratnam's
contribution.
From the early 1990s through 2009, Rajaratnam was the
head of Galleon Group (“Galleon”), a multi-billion dollar hedge
fund. Its headquarters were located in Manhattan. Rajaratnam
managed the technology fund at Galleon, and he was in charge of
nearly every aspect of the firm. Galleon had multiple portfolio
managers who oversaw investments in particular funds specializing
in particular areas, including technology, financial services,
communications, and consumer products.
In or about September 2003, in the context of
discussing whether McKinsey could provide Rajaratnam and Galleon
with advice and other services, Rajaratnam offered to pay
$500,000 a year to Kumar for Kumar’s insights. Kumar told
Rajaratnam that Kumar was not allowed to receive money for
consulting services outside of McKinsey work. Rajaratnam,
however, told Kumar that Rajaratnam would help Kumar conceal the
payments from McKinsey. Rajaratnam told Kumar to wire the money
offshore to an account in someone else’s name, and then wire the
money back into Galleon Group into an account at the hedge fund
in the name of Kumar's housekeeper, Manju Das. Kumar agreed,
initially believing Rajaratnam wanted legitimate business trend
advice. Every few months thereafter, from in or about 2004
through in or about 2006, Rajaratnam wired approximately $125,000
to an account in Europe in the name of an entity that was not
associated with Kumar directly, and the money was then wired back
into a Galleon account in the name of Manju Das.
Once he accepted the money, Kumar felt obligated to
answer Rajaratnam’s questions seeking material, nonpublic
information about McKinsey’s clients. Kumar fully understood
that by providing Rajaratnam with nonpublic information about
McKinsey’s clients that Kumar was violating one of the most
sacred McKinsey policies—maintaining the confidentiality of the
secrets of McKinsey’s clients. Kumar had signed McKinsey’s
certifications agreeing not to violate his duty of
confidentiality, and Kumar had signed a confidentiality agreement
with certain clients (including AMD) on McKinsey’s behalf.
During his scheme with Rajaratnam, Kumar repeatedly violated his
duties of confidentiality by sharing client secrets with
Rajaratnam.

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2. Kumar’s Illegal Tips To Rajaratnam In 2004 And 2005
Starting in or about 2004, Rajaratnam asked Kumar for
information about AMD’s revenues, sales, and profits. Rajaratnam
also asked Kumar for information about AMD’s guidance regarding
its future earnings. Kumar had the privilege to attend senior
management meetings with AMD’s top ten executives. During these
meetings, Kumar learned secret information about AMD’s financial
performance, and Kumar disclosed this information to Rajaratnam.
In or about 2004, Kumar also disclosed to Rajaratnam
that AMD was in discussions to sell a new chip called Opteron to
Dell and Hewlett-Packard. Rajaratnam told Kumar that this was
very useful information. In or about February 2004, AMD was able
to obtain a $400 million contract to install Opteron chips in
Hewlett-Packard products. Kumar informed Rajaratnam about this
development prior to its public announcement on or about February
24, 2004.
Subsequently, Kumar informed Rajaratnam regarding the
negotiations between AMD and Hewlett-Packard for Hewlett-Packard
to transfer a lot of its business from Intel to AMD and become a
major AMD customer. Rajaratnam kept asking Kumar if the deal was
on track, and Kumar kept updating Rajaratnam that it was on
track. Kumar told Rajaratnam that this was going to be fabulous
news for AMD. The deal was announced in or about the Fall of
2004.
Subsequently, in late 2004 and early 2005, Kumar told
Rajaratnam that AMD was going to spin out its memory business,
leaving behind a much stronger computer processing business. On
or about April 14, 2005, AMD announced that it was spinning out
its memory business, which became a new company called Spansion.
During 2004 and 2005, Rajaratnam told Kumar that
Rajaratnam was making good money on AMD and that Kumar’s
information about AMD was valuable to Rajaratnam. Things changed
by late 2005 when Rajaratnam told Kumar that Kumar’s information
about the financial performance of AMD and Kumar’s other clients
were not as detailed as Rajaratnam expected. Rajaratnam wanted
to move toward an arrangement whereby Rajaratnam would share a
portion of profits earned with Kumar’s information with Kumar.
Rajaratnam proposed buying shares of AMD stock and the stock of
other companies based on the information Kumar provided, and
Kumar refused. Kumar was more comfortable with a consulting
arrangement with Rajaratnam; Kumar believed that his receipt of
shares would leave a paper trail and was more vulnerable to being

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uncovered. In 2006, Kumar and Rajaratnam agreed that Rajaratnam
would pay Kumar at the end of each year based on the value of
Kumar’s information. Kumar preferred this arrangement which was
similar to arrangements that he had with McKinsey clients.
3. Kumar’s Illegal Tip About AMD’s Acquisition Of ATYT
From in or about late 2005 through in or about July
2006, Kumar tipped Rajaratnam about AMD’s confidential plans to
acquire ATI Technologies (“ATYT”). As AMD’s outside consultant,
Kumar was part of a small group of individuals who came up with
the plan to acquire ATYT. Kumar participated in high-level
meetings at AMD relating to the acquisition. Kumar participated
in AMD management meetings regarding the negotiations with ATYT
for the planned acquisition. As Kumar learned confidential
information about the acquisition, he informed Rajaratnam.
Rajaratnam then purchased shares of ATYT based on Kumar’s illegal
tips. Kumar tipped Rajaratnam about this acquisition long before
any public speculation about the deal, and months before AMD's
public announcement of the transaction.
Internal emails at McKinsey show that Kumar learned
secret information about the transaction for many months before
it was announced. Those emails showed that Kumar was part of the
inner circle at McKinsey advising AMD about acquiring ATYT.
Based on Kumar’s secret information, by the end of March,
Rajaratnam had purchased over 3 million shares of ATYT stock; by
early May 2006, Rajaratnam had purchased approximately 4 million
shares of ATYT stock; and by May 30, 2006, Rajaratnam had
purchased nearly 5 million shares of ATYT stock with a value of
approximately $74 million before there were any news articles or
analysts speculating about a potential deal.
After AMD announced its acquisition of ATYT, Rajaratnam
made over $22,938,866 in the accounts that he managed at Galleon.
Shortly after this announcement, Rajaratnam called Kumar at home
and told Kumar that he wanted to thank Kumar, that the news was
fantastic, that Kumar was a hero, and that they were all cheering
him right now. Kumar was nervous that others at Galleon knew
that Kumar was providing Rajaratnam with material, nonpublic
information about McKinsey’s clients. Kumar understood that
Rajaratnam would share the secret information with others at
Galleon, but he expected Rajaratnam to conceal that Kumar was the
source of the information. At some point after Thanksgiving in
2006, Rajaratnam told Kumar that he was giving Kumar $1 million
for the confidential information that Kumar had provided him that

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year. Rajaratnam told Kumar that Rajaratnam would put the money
into Kumar’s Galleon account and asked Kumar to send him the name
of the account by email. On or about December 13, 2006, Kumar
sent Rajaratnam a one-line email stating “Manju Das.”
Subsequently, instead of investing the $1 million in Kumar’s
Manju Das account at Galleon, Rajaratnam wired the money to
Kumar’s foreign account.
4. Kumar’s Illegal Tips To Rajaratnam In 2007 And 2008
In 2007, Kumar provided confidential information to
Rajaratnam relating to another one of Kumar’s McKinsey clients,
Business Objects. In or about the third quarter of 2007, Kumar
told Rajaratnam that Kumar had visited Business Objects and
learned that the company’s performance was not good. Shortly
thereafter, Rajaratnam asked Kumar whether Kumar was sure about
the information because Rajaratnam had shorted the stock. Kumar
told Rajaratnam that he was sure. Ultimately, at the conclusion
of the third quarter of 2007, Business Objects was purchased by
another company and thus Rajaratnam lost money on his trading
position in the stock. Kumar did not know that Business Objects
was going to be acquired. Rajaratnam told Kumar that he was very
upset that he lost money. Rajaratnam did not pay Kumar any money
for the information that Kumar provided in 2007.
Starting in late 2007, Kumar provided Rajaratnam with
confidential information about AMD’s “asset-light” strategy of
reducing the cost of financing the production of chips so that
AMD could focus on designing and selling the computer chips.
Accordingly, AMD planned to seek outside investment from
sovereign wealth funds around the world. Eventually, AMD
narrowed its interest into investments from sovereign wealth
funds in Brazil and Abu Dhabi in the United Arab Emirates, and
ultimately from Mubadala in Abu Dhabi.
Kumar’s conspiracy with Rajaratnam was caught on a
court-authorized wiretap over Rajaratnam’s cellular telephone for
eight 30-day periods from approximately March 2008 through
December 2008.
On multiple recorded conversations captured over the
wiretap, Rajaratnam asked Kumar for material, nonpublic
information, and Kumar provided it to him.
For example, during a March 24, 2008, conversation,
Kumar called Rajaratnam from Tokyo. Kumar immediately told

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Rajaratnam about a corporate secret regarding a McKinsey client.
Rajaratnam subsequently asked about a confidential investment of
a “processor company” and the timing of the public announcement
of that investment. That was an early reference to AMD’s
reorganization which was subsequently announced in or about early
October 2008. During the conversation, Kumar also conveyed
information about AMD’s nonpublic quarterly earnings,
specifically that AMD was going to announce an 11% to 15%
reduction in revenues.
On or about May 2, 2008, Rajaratnam’s conversation with
Kumar was also captured over the wiretap. During this
conversation, Kumar told Rajaratnam that there was a term sheet
due the next day for Spansion, a public company. Kumar learned
about this term sheet from his conversation with the CEO of the
company. It was nonpublic information. A term sheet reflected
that Spansion was taking steps to be acquired. During the
conversation, Rajaratnam asked Kumar whether they should buy some
Spansion because of the term sheet, and Kumar told Rajaratnam
that they should wait to see what offer comes the following day.
As Kumar's work on AMD’s reorganization continued,
including the possible multi-billion dollar investment into AMD
by Mubadala, Kumar provided that confidential information to
Rajaratnam, and Rajaratnam traded based on it. Multiple
recordings captured over Rajaratnam’s cellular telephone
reflected that Kumar provided these secrets to Rajaratnam, and
that Rajaratnam traded based on them. For example, on August 15,
2008, Kumar informed Rajaratnam that “they've shaken hands,”
referring to the fact that the Middle Eastern fund and AMD had
agreed in principle to the terms of the fund's investment in AMD.
Rajaratnam then asked about the timing of the deal and whether he
would get a heads up in advance of the announcement, and Kumar
said he was able to provide that information to Rajaratnam.
Rajaratnam also asked Kumar how the third quarter, which ended in
September, was tracking, and Kumar responded that he would check
on that. Rajaratnam asked how much the Middle Eastern fund was
investing, and Kumar said up to 6 to 8 billion dollars.
Rajaratnam asked Kumar whether he should purchase shares, and
Kumar said “the announcement won’t happen ‘til, uh, the week
after Labor Day.” Rajaratnam then said that he was going to buy
one million shares of AMD stock.
On or about September 11, 2008, Kumar spoke with
Rajaratnam again. This call was also captured over the wiretap.
Kumar told Rajaratnam the exact timing of the public announcement

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that AMD planned to issue relating to the outside investment.
Specifically, Kumar told Rajaratnam that the deal was on track
and they’re moving the announcement date to the first week of
October. Subsequently, Kumar told Rajaratnam that the deal would
be announced on October 7, 2008, and the deal was announced to
the public on that date.
Based in part on Kumar’s illegal tips about the
reorganization, Rajaratnam purchased over $100 million dollars of
AMD stock prior to the public announcement of the deal on October
7. (Rajaratnam also received information about the
reorganization from Danielle Chiesi, who Rajaratnam knew was
obtaining the information from the former Chairman of the Board
of Directors and Chief Executive Officer of AMD, Hector Ruiz.)
Although Rajaratnam lost money on these tips because Rajaratnam
held on to AMD’s stock for a while and AMD’s stock did not
increase in value during that time in the middle of the financial
crisis, Rajaratnam executed the trades anticipating that the
price of the stock would rise and that he would make millions of
dollars.
On or about October 3, 2008, Kumar was captured on
another wiretap calling tipping Rajaratnam about eBay’s plans to
announce a massive layoff. Right after Kumar tipped Rajaratnam
about this layoff, Rajaratnam shorted eBay’s stock, betting that
the price of the stock would decline and that he would make
money. Shortly thereafter, eBay announced the layoffs, and
Rajaratnam reaped approximately $883,973 in illicit profits.
In 2008, Rajaratnam suggested multiple ways to pay
Kumar. Rajaratnam offered the following alternative methods:
(1) He offered to create a new fund of several hundred million
dollars for Kumar to manage; (2) He offered to buy Kumar an
apartment in New York; (3) He offered to return to a consulting
agreement; indeed, a June 2008 wiretap call between Rajaratnam
and Kumar captured a discussion between them about getting in
touch with a Galleon employee regarding a new consulting
arrangement; and (4) He offered to trade in any brokerage account
that Kumar opened using Kumar's account number and password.
Kumar rejected all of these offers, and continued to tip
Rajaratnam with the understanding Rajaratnam would pay Kumar
based on Rajaratnam’s judgment at the end of each year as to the
value of the information Kumar provided him.

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5. Kumar’s Trading In Starent
In or about October 2009, Kumar and Rajaratnam traveled
to Trinidad for the wedding of a mutual friend. During a
stopover in Miami for two days, Kumar and Rajaratnam went to the
beach. While at the beach, Rajaratnam received a phone call and
stepped away to speak privately with someone. When Rajaratnam
returned, he was a little excited and told Kumar that Rajaratnam
received a call that Cisco is going to buy the company called
Starent Networks Communications (“Starent”). Kumar had not heard
of Starent before. Rajaratnam further told Kumar that one of
Rajaratnam’s former employees, Ali Far, was wearing a wire now
and that Rajaratnam had to be really careful. Rajaratnam told
Kumar to be careful and advised Kumar to use prepaid phones to
make phone calls. Based on Rajaratnam’s tip, on or about October
7, 2009, Kumar purchased approximately 300 shares of Starent
(with a value of approximately $7,000). On or about October 13,
2009, Cisco announced publicly that it was acquiring Starent.
Three days later, on or about October 16, 2009, Rajaratnam and
Kumar were arrested.
6. Rajaratnam’s Illegal Payments To Kumar
In total, Kumar received approximately $1.7 million in
illegal payments from Rajaratnam and several hundred thousand
dollars in profits in Galleon funds arising out of the illegal
payments from Rajaratnam. During the course of the scheme from
2004 through 2009, Kumar did not pay any federal or state taxes
based on the illegal monies received from Rajaratnam. As a
result, Kumar repeatedly committed tax fraud. Since his arrest,
Kumar has filed amended and corrected tax returns.
7. Kumar’s Motives
This case presents the baffling question of why an
incredibly bright, highly accomplished, professional consultant,
and senior partner at arguably the world’s leading consulting
firm, who contributed considerable time to start the Indian
School of Business and to other charities, would betray his
profession’s core values, the confidences of his clients, and the
trust of his McKinsey colleagues.
There is no easy answer. Unfortunately, Kumar joins
the company of other similarly situated accomplished
professionals who have crossed the same line and prompted the
same question. Based on the evidence, it appears that Kumar’s

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motivations were mixed and varied. Initially, Kumar agreed to
provide Rajaratnam with his ideas in violation of McKinsey’s
policies to receive money and obtain the praise and admiration of
a billionaire hedge fund manager. After Kumar started to get the
money, and Rajaratnam probed for secret information, Kumar
capitulated knowingly and readily because the money brought
obligations, Kumar wanted to continue to impress Rajaratnam with
his expertise, Rajaratnam tempted Kumar with future business
opportunities, and Kumar valued Rajaratnam’s close friendship.
On the one hand, Kumar was earning significant amounts of money
at McKinsey and, as someone who lived relatively modestly, his
assets far exceeded his liabilities. On the other, as soon as
Rajaratnam probed for nonpublic information, Kumar could have
simply refused to provide any and turned away. Once Kumar
crossed the line, it became far easier for Kumar to disclose
similar information. In short, while Rajaratnam certainly
tempted Kumar (as well as others) with access to his money,
power, and friendship, Kumar knowingly gave into that temptation
and willingly became a part of Rajaratnam’s corrupt world.

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III. Kumar’s Cooperation
Kumar’s cooperation was nothing short of extraordinary.
He substantially helped the Government secure convictions in two
of the most significant and high-profile trials of defendants for
securities fraud in history, Raj Rajaratnam and Rajat Gupta. At
both trials, Kumar’s testimony was absolutely essential. During
Rajaratnam’s trial, Kumar provided the most important testimony
regarding Kumar’s illegal tips to Rajaratnam, Rajaratnam’s
payments to Kumar for these tips, and the efforts taken to
conceal those payments from regulatory and other Governmental
authorities. During Gupta’s trial, Kumar provided critical
testimony regarding Gupta’s close relationship with Rajaratnam,
Gupta’s and Rajaratnam’s involvement in launching a billiondollar
private equity firm, and Gupta’s statements to Kumar
regarding his relationship with Rajaratnam following the
bankruptcy of Lehman in September 2008. Significantly, upon his
arrest, Kumar realized right away that his best hope of regaining
some self-respect and the respect of his family, correcting his
wrongs from the past, accepting responsibility for his criminal
conduct, and moving forward was to use his undeniably acute mind,
energy, and recollection to assist the Government in its
investigation and prosecution of others. From the first day of
Kumar’s cooperation through the present, he’s been one of the
best and most important cooperating witnesses that the
undersigned Assistant U.S. Attorneys and prior Assistant U.S.
Attorneys working on the Rajaratnam investigation have worked
with in securities fraud cases.
1. The Timing Of Kumar’s Cooperation
The speedy cooperation of Kumar shortly after his
arrest was highly significant for the Government.
Kumar was arrested on October 16, 2009, the same day as
Rajaratnam. Kumar’s arrest clearly shocked him. His arrest
rocked his world to its core foundation, causing him to
immediately faint when the FBI informed him that he was under
arrest. Deciding what steps to take following his arrest, Kumar
did not hesitate. Kumar did not second-guess. Kumar did not
weigh his options. Instead, Kumar did what almost all
individuals involved in Rajaratnam’s insider trading schemes
notably did not do—Kumar decided to cooperate immediately with
the Government.

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In the context of the Government’s investigation and
prosecution of Kumar, Kumar’s immediate cooperation warrants
special mention and recognition. Very few individuals involved
in Rajaratnam’s insider trading schemes agreed to cooperate, even
though many were also caught on a wiretap disclosing and/or
receiving inside information from Rajaratnam. In the world of
Rajaratnam and his co-conspirators, cooperation was sadly viewed
as a fundamental breach of trust to one another, and cooperators
were viewed by many Galleon employees and other members of
Rajaratnam’s criminal schemes as “ratting out” a trusted friend
and thus a lowly, feeble, and pathetic action to take. In
general, such logic is perverse and unfortunate. In the context
of insider trading cases, it is remarkably ironic. Rajaratnam,
Chiesi, and their other co-conspirators apparently believed it
was better to go to jail than breach their criminal partnership
and trust to one another even though their multiple crimes
involved breaching or causing others to breach fiduciary and
other obligations of trust to their employers and/or clients.
This negative view of cooperation made the Government’s
investigation into insider trading schemes at Galleon all the
more difficult. Indeed, there remain active, ongoing criminal
investigations of former Galleon employees that, although moving
forward in a deliberate manner, would have been undoubtedly
accelerated had additional Galleon employees agreed to cooperate.
The timing of Kumar’s cooperation was also significant
because, at the time of Rajaratnam’s arrest, there was great
skepticism in the financial services industry about the charges.
Indeed, published reports and commentators in the financial
services industry called into question whether the Government was
criminalizing the job of financial analysts to ferret out
nonpublic information about public companies. Kumar’s guilty
plea and cooperation substantially ended that skepticism, and
made it abundantly clear that the Government was prosecuting
conduct that was clearly criminal and that took advantage of the
average ordinary investor in the stock market. Finally, Kumar
was the first of the individuals charged at or after the time of
Rajaratnam’s arrest who agreed to cooperate with the Government.
Following Kumar’s guilty plea, other individuals agreed to
cooperate.
2. Kumar’s Proffers And Meetings With The Government
The Government only needed two in-person meetings with
Kumar before deciding to sign him up to a cooperation agreement.

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The brief number of proffers necessary before determining to sign
Kumar up as a cooperating witness is telling. During those
proffers, Kumar was clear, concise, and straightforward about his
criminal conduct, and the conduct of others. Kumar did not
understate or overstate his criminal activities; Kumar’s
recollection was precise; Kumar’s statements were fully
corroborated by wiretap recordings, documents, witness
statements, and other evidence; and Kumar’s contrition and full
acceptance of responsibility was clear beyond a shadow of any
doubt.
Following his guilty plea, the Government spoke with
Kumar in person and by phone on numerous occasions. The
undersigned and other Assistant U.S. Attorneys met with Kumar in
person on many occasions to obtain evidence and information in
preparation for one of the most significant insider trading
trials in history, United States v. Raj Rajaratnam. Rajaratnam
became the modern poster child for illegal insider trading in the
asset and money management community, and there was intense and
widespread public attention to the investigation, the charges,
and the subsequent trial.
During those meetings with the Assistant United States
Attorneys and FBI agents, Kumar was always truthful, helpful,
diligent, and cooperative. Kumar never complained when the
Government wanted to speak with him again and again and again;
Kumar never complained when asked to review tens of thousands of
documents, including all of his McKinsey emails during the
relevant period and his extensive calendar entries; Kumar never
complained when asked to review numerous wiretap recordings and
transcribe them; and Kumar never complained when the Government
asked the same questions over and over again in various forms.
During the course of his cooperation in connection with the
Rajaratnam trial, Kumar spent over 50 days and hundreds of hours
reviewing thousands of documents at the Government’s request,
including identifying documents relevant to his criminal scheme
with Rajaratnam. In short, prior to and during Rajaratnam’s
trial, Kumar was the ideal cooperating witness who met with the
Government without hesitation and without reservation.
Following Rajaratnam’s conviction, Kumar continued to
speak by phone and meet with Assistant U.S. Attorneys and FBI
agents in connection with the Government’s ongoing investigation
of Rajat Gupta, and the subsequent prosecution and trial in
United States v. Rajat Gupta. Indeed, Kumar’s cooperative
attitude never waned for a second. Prior to and during Gupta’s

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trial, Kumar was, once again, the ideal cooperating witness who
met with the Government without hesitation and without
reservation. Kumar never complained even when he was present in
New York (while his family was living in California) for days on
end without knowing when he would be called as a witness. During
the course of his cooperation in connection with the Gupta trial,
Kumar met with the Government over ten times, including seven
visits from California to New York.
A small example of Kumar’s cooperative approach
reflects the nature of Kumar’s full acceptance of responsibility
and unyielding commitment to being truthful and as helpful and
available as possible to the Government. During the Gupta trial,
Kumar was scheduled to testify on a Wednesday. However, because
the testimony of the Government’s prior witnesses went longer
than anticipated, the Government did not call Kumar that week and
re-scheduled him to testify early the following week. Kumar flew
back to California that weekend for a significant family
commitment. Although Kumar was scheduled to spend the entire
Sunday with many family members on an important family occasion,
as previously planned with the consent of the Government, Kumar
did not hesitate when the Government asked him to return on an
earlier flight on Sunday so that the Government could meet with
him yet again. Kumar altered his plans knowing full well that by
returning earlier he would be unable to fulfill his family
obligations that weekend because the Government had made the
request.
In total, Kumar met with the Government in person and
testified on over approximately 20 occasions, and spoke with
Government representatives by phone on multiple occasions.
In sum, Kumar repeatedly met with the Government prior
to the criminal trials of Rajaratnam and Gupta without complaint
and fully interested in doing everything he could to answer the
Government’s questions truthfully, review documents, transcribe
recordings, and provide information.
3. Kumar Proffered About Extensive Criminal Conduct For
Which He Was Not Charged Originally
Prior to his guilty plea, Kumar informed the Government
about extensive criminal conduct for which he was not charged by
complaint. For example, without knowing whether the Government
had any evidence about Kumar’s illegal tips to Rajaratnam
relating to AMD’s planned nonpublic acquisition of ATYT, Kumar

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July 16, 2012
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disclosed his tips relating to this acquisition in detail to the
Government. In doing so, Kumar demonstrated that he was willing
to provide complete and accurate information to the Government
about his criminal conduct even though it carried risks that
Kumar would have to admit to far greater criminal conduct than
the Government either knew or would be able to prove without that
cooperation.
4. Kumar’s Trial Testimony And The Successful
Prosecution Of Raj Rajaratnam
Kumar was one of the most important witnesses at the
criminal trial of Rajaratnam. Rajaratnam was charged with five
counts of conspiracy to commit securities fraud in connection
with five separate insider trading conspiracies. One of those
counts related to a conspiracy between Rajaratnam, Kumar, and
others during which Kumar provided Rajaratnam with nonpublic
information relating to AMD, ATYT, eBay, Business Objects, and
other companies, in breach of Kumar’s fiduciary and other duties
of confidentiality, so that Rajaratnam could trade based, in
part, on that information at the expense of average ordinary
investors. Rajaratnam was also charged with a substantive count
of illegal insider trading in ATYT stock in connection with
Kumar’s illegal tips to Rajaratnam about AMD’s acquisition of
ATYT prior to public announcement.
The Government called Kumar as its second witness at
Rajaratnam’s trial. Kumar was also the Government’s first of
three cooperating witnesses who testified. Because Kumar’s
testimony provided devastating evidence in detail about
Rajaratnam’s criminal conduct, and was corroborated by wiretap
recordings, documents, and other evidence, it was an obvious and
easy decision to call Kumar as the first cooperating witness at
trial.
Kumar testified over four days. Kumar was clearly
contrite (as he had been since the very first day of his
cooperation with the Government), truthful, and accepting of his
criminal conduct throughout his testimony. Kumar explained every
aspect of his criminal conspiracy with Rajaratnam in a
chronological, clear, and concise fashion. Kumar took the jury
through his relationship with Rajaratnam from the time that he
graduated Wharton with Rajaratnam in 1983 through their arrests
on October 16, 2009. Kumar also explained how his criminal
conspiracy with Rajaratnam began, initially as a consulting
arrangement with financial payments that violated McKinsey’s

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policies and procedures and U.S. tax laws and then transmogrified
quickly into an arrangement where Kumar illegally tipped
Rajaratnam with secret information in exchange for money and
other benefits. Kumar further took the jury through multiple
recorded conversations with Rajaratnam, explaining what he meant
and what he understood Rajaratnam meant. Finally, Kumar
explained the complicated round-trip wire transfers in the names
of other entities and individuals (wired from Galleon to a
European entity, wired back to Galleon in an account in the name
of Kumar’s housekeeper, and then partial wire transfers back into
a foreign account in the housekeeper’s name) through which
Rajaratnam and Kumar attempted to conceal Rajaratnam’s payments
for Kumar’s illegal tips.
Kumar’s testimony was nothing short of devastating.
Kumar was credible, precise, and fully corroborated. Although
Rajaratnam’s counsel repeatedly attacked Kumar’s credibility on
cross-examination, it is readily apparent from the jury’s finding
of guilty on both the conspiracy and substantive count relating
to Kumar’s illegal tips to Rajaratnam that the jury credited
Kumar’s testimony and rejected Rajaratnam’s counsel’s arguments
to the contrary.
Prior to Kumar’s cooperation: (1) The Government did
not know about Kumar’s illegal tips to Rajaratnam relating to AMD
in 2004 and 2005 and Business Objects in 2007; (2) The Government
had collected some evidence relating to Kumar’s illegal tips to
Rajaratnam relating to AMD’s acquisition of ATYT, but not
sufficient evidence to charge Rajaratnam and Kumar; and (3) The
Government had collected some evidence relating the round-trip
wire transfers used to conceal Rajaratnam’s illegal payments to
Kumar, but again insufficient evidence to charge Rajaratnam and
Kumar. Accordingly, without Kumar’s cooperation: (1) It is
unlikely the Government would have been able to charge Kumar and
Rajaratnam with Kumar’s illegal tips to Rajaratnam relating to
AMD in 2004 and 2005, and Business Objects in 2007; and (2) It is
unclear whether the Government would have been able to charge
Rajaratnam with his illegal trading in ATYT stock and obtained
all evidence relating to the round-trip wire transfers, as other
individuals at Galleon refused to cooperate. With Kumar’s
cooperation, and the extensive corroboration for his recollection
of the facts, the Government was easily able to present
additional charges to the grand jury and obtain an indictment and
subsequent conviction against Rajaratnam for his trading in ATYT
stock, and present extensive evidence of the use of the roundtrip
wire transfers.

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The significance of adding Rajaratnam’s trading in ATYT
stock based on Kumar’s illegal tips, and Kumar’s testimony
regarding his tips and the round-trip wire transfers, cannot be
overstated. First, Rajaratnam’s trading in ATYT resulted in
nearly $23 million in illicit profits. It was an important
reflection of the unlawful benefits of illegal insider trading,
and it enabled the Government to show Rajaratnam’s motivations
for committing illegal insider trading crimes despite his
personal wealth and apparent business success. Second, the
profits from Rajaratnam’s trading in ATYT was a significant
driver of the Sentencing Guidelines range. Third, Kumar’s
testimony was essential to explain somewhat ambiguous language
during certain conversations and coded language during other
conversations intercepted over the wiretap. There is no doubt
that Kumar’s explanations of these conversations provided
critical context and meaning for the jury. Fourth, Kumar
provided critical evidence regarding Rajaratnam’s knowledge of
the wrongfulness of his conduct, including testimony about
Rajaratnam’s plans to conceal the monetary payments and
Rajaratnam’s statements regarding the significance of Kumar’s
illegal tips. Fifth, many of Rajaratnam’s defenses collapsed
under the weight of Kumar’s testimony. For example, one of
Rajaratnam’s defenses was that Kumar’s illegal tips was already
public information. Through Kumar’s testimony, as corroborated
by contemporaneous emails and other evidence, the Government was
able to demonstrate that this defense made no sense whatsoever.
Finally, Kumar’s testimony enabled to Government to explain in a
clear and simple manner the complicated round-trip wire transfers
that Kumar and Rajaratnam used to cover up Rajaratnam’s payments
to Kumar. That testimony in conjunction with the contemporaneous
records was incredibly effective in showing, among other things,
that Rajaratnam knew what he was doing was wrong and illegal.
Rajaratnam was convicted of all fourteen counts against
him and subsequently sentenced by the Honorable Richard J.
Holwell to a term of imprisonment of 11 years. Judge Holwell
also ordered Rajaratnam to pay a $1,400 special assessment, a
fine of $10,000,000, and forfeiture in the amount of $53,816,434.
The largest portion of the forfeiture amount was based on Kumar’s
illegal ATYT tips to Rajaratnam.
5. Kumar’s Trial Testimony And The Successful
Prosecution Of Rajat Gupta
Kumar was a significant witness at the criminal trial
of Gupta. Gupta was charged with one count of conspiracy to

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July 16, 2012
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commit securities fraud in connection with tipping Rajaratnam
regarding nonpublic information about Goldman Sachs and Procter &
Gamble. Gupta was also charged with multiple substantive counts
in connection with Rajaratnam’s trading in those securities
based, in part, on Gupta’s illegal tips.
A critical part of the case revolved around the nature
of the relationship between Gupta and Rajaratnam. The Government
argued that, among other things, Gupta tipped Rajaratnam because
of their close friendship, because of Gupta’s business
relationships with Rajaratnam, because of Gupta’s interest in
obtaining a stake in Galleon, and because of Gupta’s interest in
having Rajaratnam make Gupta whole on an investment that went
sour after the collapse of Lehman Brothers. By contrast, Gupta
argued, among other things, that he had no motive to tip
Rajaratnam given Gupta’s independent business success and wealth,
and that, by mid-to-late 2008, Gupta and Rajaratnam had a falling
out over Rajaratnam’s mismanagement and fraudulent conduct in
connection with Rajaratnam’s oversight of a fund called Voyager
which Gupta and Rajaratnam co-founded and shared the equity
ownership.
Kumar’s testimony directly and substantially undermined
Gupta’s defenses. First, Kumar testified regarding the business
ties between Gupta and Rajaratnam. For example, Kumar provided
critical testimony of several in-person and telephonic meetings
with Gupta, Rajaratnam, and Kumar during which the future of
Galleon and Gupta’s role at Galleon was discussed. Kumar also
explained the original discussions behind NSR, and both Gupta’s
and Rajaratnam’s roles in founding and supporting this billiondollar
private equity firm. Second, Kumar explained the
background of Gupta’s relationship with Rajaratnam, and provided
critical context for that relationship. Finally, Kumar provided
important testimony regarding Gupta’s statements to Kumar
following the Lehman Brothers bankruptcy about Gupta’s investment
in Voyager, Gupta’s hope that Rajaratnam would make Gupta whole
after the collapse of the Voyager fund, and Gupta’s discovery
after January 2009 of Rajaratnam’s fraudulent conduct in
connection with Rajaratnam’s management of the Voyager fund.
That timing undermined Gupta’s apparent defense that he had
discovered Rajaratnam’s fraudulent conduct prior to or shortly
after the bankruptcy of Lehman Brothers.
After a short period of deliberation, in a trial before
the Honorable Jed S. Rakoff, the jury convicted Gupta of
conspiracy to commit securities fraud and three of the five

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substantive counts of securities fraud. Judge Rakoff has
scheduled the sentencing of Gupta for October 2012.
Notably, Kumar testified at the Gupta trial despite the
fact that Gupta was Kumar’s mentor for much of Kumar’s career at
McKinsey. Kumar and his family were close with Gupta and his
family. Undoubtedly, given this personal relationship, although
Kumar never said it, providing information helpful to the
Government during the criminal investigation of Gupta and during
the criminal trial of Gupta must have been difficult for him.
That Kumar never complained about providing the information or
testifying at Gupta’s trial is yet another reflection of Kumar’s
full acceptance of responsibility and compliance with his
cooperation agreement.
III. Conclusion
Kumar’s cooperation with the Government was absolutely
essential in two of the most important securities fraud trials in
history. Kumar provided essential evidence of his conspiracy
with Rajaratnam in the trial of United States v. Raj Rajaratnam.
That evidence included critical testimony of Kumar’s illegal
arrangement to provide material, nonpublic information to
Rajaratnam in exchange for money, the prospect of future business
opportunities, and friendship; Rajaratnam’s elaborate scheme to
conceal his payments to Kumar from McKinsey and others; and a
detailed explanation of the meaning of numerous wiretap
conversations between Rajaratnam and Kumar. Kumar also provided
essential evidence of Gupta’s relationship with Rajaratnam and
Gupta’s statements regarding that relationship in the trial of
United States v. Rajat Gupta. That evidence included critical
testimony of Gupta’s involvement in multiple conversations with
Rajaratnam and Kumar regarding the future of Galleon and Gupta’s
roles in Galleon; Gupta’s involvement in co-founding a billiondollar
private equity firm called New Silk Route or NSR with
Rajaratnam and others; and Gupta’s statements to Kumar regarding
Gupta’s relationship with Rajaratnam following the Lehman
Brothers bankruptcy on or about September 15, 2008.
Based in part on Kumar’s cooperation, both Rajaratnam
and Kumar were convicted. The successful prosecutions of
Rajaratnam and Gupta have received widespread public attention
and, as a result, should deter some people in the financial
services industry who would otherwise be tempted to engage in
similar misconduct.

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Identifying, uncovering, and prosecuting insider
trading crimes is difficult. By their very nature, criminal
insider trading conspiracies are secretive, and the participants,
who generally are highly intelligent and resourceful, are able to
conceal their activities well and create false explanations for
their trading based on material, nonpublic information.
Cooperators like Kumar are incredibly important in order to
prosecute these cases. Even with wiretap evidence or other
recordings, cooperators provide context and explanation for
conversations which might otherwise be vague or unclear at times.
Kumar’s significant, powerful, and timely cooperation
has provided substantial assistance to the Government in the
investigation and prosecution of two of the most high profile
defendants convicted of illegal insider trading in history.
Therefore, this Court should sentence Kumar in light of the
factors set forth in Section 5K1.1(a)(1)-(5) of the Sentencing
Guidelines.
cc: U.S. Probation Officer
Greg Morvillo, Esq.
Respectfully submitted,
PREET BHARARA
United States Attorney
By: /s/ Reed Brodsky
Reed Brodsky/Richard Tarlowe
Assistant United States Attorney
Tel.: (212) 637-2492/2330