REFUGEE

nsider trading was hardly the worst of Raj Rajaratnam’s crimes, according to a lawsuit filed against the indicted Galleon Group founder last week.

A group of victims of the Liberation Tigers of Tamil Eelam claim that Rajaratnam helped finance the group, which is classified by the U.S. government as a terrorist group. The Tamil Tigers fought a 33-year-long war to win independence for northern and eastern Sri Lanka before being defeated earlier this year.

In a lawsuit filed last week in Newark,N.J., federal court, the 30 victims allege that Rajaratnam, a Sri Lankan native, and his family charity knowingly offered support and financing to the Tigers. The suit also names the Tamil Rehabilitation Organization, an allegedly phony charity to which Rajaratnam donated some $5 million. TRO’s offices were raided by U.S. authorities and its assets frozen in 2006 after it was found to be financing the terrorist group.

Rajaratnam’s links to TRO and the Tamil Tigers emerged during a probe into the latter’s fundraising in the U.S. The hedge fund chieftan was not accused of any wrongdoing in that case, which netted eight guilty pleas. Rajaratnam claims he did not know that TRO was sending money to the Tamil Tigers, and that his donations were to assist in rebuilding efforts after the 2004 tsunami.

“The accusation that Mr. Rajaratnam supported the LTTE is flatly untrue and libeolous, and we are confident that the court will dismiss these baseless charges,” the Galleon founder’s lawyer, Jim Walden, said in a statement. “Mr. Rajaratnam has the greatest sympathy for all victims of violence in Sri Lanka and has a long history of helping Sri Lankans of all ethnic groups through substantial charitable donations over many years.”

The lawsuit, which seeks unspecified damages, accuses Rajaratnam, his foundation and the TRO of “aiding and abetting, intentionally facilitating and/or disregarding crimes against humanity in violation of international law.”

Rajaratnam’s links to the Tamil Tigers are also still being investigated in Sri Lanka. That country’s central bank retracted a statement made last week that the hedge fund manager had been cleared, and said that it was continuing its probe, and was also looking into the role Galleon, which is in the process of shuttering its hedge funds, may have played.

“The TRO investigations are continuing,” Ajith Nivad Cabral, the central bank’s governor, told Reuters. “It’s not clear yet. The involvement of the Galleon fund with funding the TRO is also being probed.”

Rajaratnam has been monitored by his home country’s defense ministry for several years. A spokesman for the ministry said he had been “involved in several schemes funding the LTTE.”

NEWARK (CN) - A recently arrested hedge fund billionaire and a charity he founded sent millions of dollars to the Liberation Tigers of Tamil Eelam, with "the intent to advance the LTTE's terror campaign," dozens of victims of the Tamil Tigers claim in Federal Court. Families of 21 dead people say Rajakumara Rajaratnam contributed his own money, raised funds and organized Tsunami Relief Inc. to send money to the Tamil Rehabilitation Organization, "the largest fund-generating front organization for the LTTE."
The Tamil Tigers were founded in the 1976 by the late Vellupillai Prabhakaran, and waged war against Sri Lanka's Sinhalese majority. The group gained control of Northern Sri Lanka and built up an army of thousands, including squads of suicide bombers. The Tigers continued fighting despite a 2002 cease-fire agreement, seeking an independent state for Sri Lanka's Tamils, until Prabhakaran was killed this spring and the Tigers finally surrendered.
The plaintiffs say the Tigers received a substantial amount of funding from the co-defendant Tamil Rehabilitation Organization, a self-proclaimed "self-help organization for the Tamil Diaspora." The families say the so-called charity helped fund the "terrorist aims of the LTTE."
They say the charity opened a colony for Tamils in Sri Lanka in memory of a suicide bomber and handed out calendars with a photo of Prabhakaran on it. Money sent to the Tamil Rehabilitation Organization was used to assist in terrorist attacks, and to pay pension benefits of slain Tamil Tigers and the salaries of live ones, according to the complaint.
Defendants Rajakumara Rajaratnam and his father, Jesuthasan Rajaratnam gave substantial donations to the TRO U.S. branch, as individuals, through their family foundation and through defendant Tsunami Relief Inc., according to the complaint.
Rajakumara Rajaratnam founded Tsunami Relief in 2004 and, the plaintiffs say, directed it "to donate the money with the knowledge and purpose that it be funneled by TRO to LLTE to help LTTE carry out its campaign of bombings."
Jesuthasan Rajaratnam lobbied for the Tamil Tigers, according to the complaint, and has been indentified by LTTE operatives "as a source for money used to bribe U.S. officials in connection with LTTE's attempts to remove LTTE from the U.S.'s list of Foreign Terrorist Organizations."
The plaintiffs say they either lost family members or were injured in 5 Tamil Tiger bombings in 2007-2008. This included two bus bombings, a railway station suicide bombing, a suicide bombing at the beginning of a Kanthi Stadium marathon race and a parcel bombing at the "No Limit" clothing store in a suburb of Colombo. They seek monetary damages, alleging crimes against humanity, and are represented by Joseph DePalma with Lite DePalma.

Here is Courthouse News' Oct. 19 story on the indictment of Raj Rajaratnam.
Hedge Fund Indictments Feature
Colorful Transcripts of Wiretaps
Barbara Leonard
WHITE PLAINS, N.Y. (CN) - Billionaire hedge fund trader Raj Rajaratnam milked friends and business acquaintances for inside information on deals from which he and his firm Galleon Management made tens of millions of dollars, federal prosecutors say. A second indictment accuses Danielle Chiesi and Mark Kurland, of New Castle Funds, and IBM senior vice president Robert Moffatt of related inside trading. Transcripts from wiretaps in this 27-page indictment are particularly colorful.
Rajaratnam and codefendants Rajiv Goel and Anil Kumar are accused of conspiring to trade more than 6 million shares of Advanced Micro Devices, Hilton, Google and other companies.
This 34-page indictment too includes wiretap transcripts. They pale, however, before the transcripts in the Chiesi complaint, which often appear to have come from a grade B movie.
Prosecutors say they used months of wiretaps and secret cooperating witnesses to expose the largest insider-trading ring in history.
According to the transcripts, Chiesi, a trader with the New Castle division of Bear Stearns Asset Management, said that without the insider information she wouldn't have touched stocks belonging to troubled Advanced Micro Devices with "a fucking 10 foot pole."
The transcripts appear to show that Chiesi knew the scheme was illegal because she constantly emphasized the importance of speaking on secure lines and not using e-mail.
"You put me in jail if you talk," according to the transcript of one conversation. "I'm dead if this leaks. I really am ... and my career is over. I'll be like Martha fucking Stewart."
In an affidavit, FBI Special Agent Diane Wehner lays out a series of nonpublic deals that tech company officials allegedly leaked to Chiesi, who shared the information with Kurland. The transcripts do not indicate what Moffat, the IBM executive got in exchange for information he allegedly leaked to Chiesi about an AMD deal to which he was privy because the company needed to license IBM technology.
Chiesi had New Castle buy 127,600 shares of AMD, worth $2.3 billion, in the weeks before the announcement that the tech company would spin off its manufacturing division with financing help from Abu Dhabi investors.
Chiesi allegedly assured Kurland, a former senior managing director of Bear Stearns, that Moffat would let her know when the deal would go down. The transcript from one call reports that she tells him she will see Moffat "on fucking Sunday at my mom's house."
AMD shares went up by 25 percent after it announced the spinoff, though the affidavit says it was not actually a profitable deal because the sour economy had caused shares to drop 28 percent while Chiesi was buying up her stake.
Chiesi worried that if AMD stock increased by 30 percent she "could get fucked" because her profitable trading would attract attention from regulators. Hedge fund mogul Raj Rajaratnam advised her to establish a trading pattern and sell off half the AMD stock before the "unbelievable" announcement, according to the complaint.
Calls intercepted from July to September 2008 allegedly show Rajaratnam and Chiesi speaking repeatedly about using confidential information to trade shares of tech companies that include IBM, Akami and Sun Microsystems.
Moffat allegedly tipped Chiesi to IBM's unannounced earnings reports and its plan to acquire Sun - two events that caused stocks to jump and produce $1.4 for New Castle accounts. Chiesi earned more than $2.4 million from the inside trading, according to the complaint.
In the Rajaratnam complaint, codefendant Kumar is a director at McKinsey & Co.; Goel is a managing director at Intel Capital, an Intel subsidiary.
The SEC filed a separate complaint against all six individuals, Galleon Management and New Castle Funds.

Seven years ago, the South Carolina plaintiffs firm Motley Rice, which made its name in tobacco and asbestos mass tort litigation, filed a $1 trillion suit against members of the Saudi royal family on behalf of 9/11 victims and their families. Since then, the firm has become something of a private human rights avenger, filing a half dozen other terrorism-related cases on behalf of victims around the world. The firm's most recent headline-grabber: Thursday's 67-page New Jersey federal district court complaint against Raj Rajaratnam, the Galleon Group hedge fund founder indicted earlier this month for insider trading.

The plaintiffs in the Motley Rice suit--victims and survivors of attacks by the Tamil Tigers, a Sri Lankan separatist group--accuse Rajaratnam of funneling as much as $5 million to the Tigers via a Sri Lankan charity front. (Rajaratnam's defense lawyer, James Walden of Gibson, Dunn & Crutcher, told Bloomberg the allegations are "flatly untrue and libelous.") Though Motley Rice filed the suit now to capitalize on media interest in Rajaratnam following his arrest, the firm has been investigating the Galleon founder for a year.

On Friday, we caught up with Michael Elsner, who heads Motley Rice's intriguingly-named "anti-terrorism and human rights" practice group, to ask him about Rajaratnam and Motley Rice's other terrorism cases.

Litigation Daily: Thanks for talking with us. How strong is the case against Rajaratnam?
Elsner: We think the case is very strong. The filing of the complaint is the culmination of a year's worth of investigation. We think that we've uncovered evidence that Rajaratnam made payments to the Tamil Tiger terrorist organization.

LD: Is it coincidence that you decided to file your lawsuit so soon after the Justice Department charged Rajaratnam with insider trading?
Elsner: We were unaware of the federal investigation. We would probably have suit filed in a month or two from now if not for that, but we felt it was important to file the complaint now.

LD: Why did you decide to investigate Rajaratnam in the first place?
Elsner: We were asked by some terrorism victims in Sri Lanka if we would investigate potential financiers of the [Tamil Tigers] from the United States. So we began to investigate who in the U.S. was providing this funding. We found a State Department cable that showed that [Rajaratnam] had provided millions to the LTO [the Tamil Rehabilitation Organization], which channeled those funds to the Tamil Tigers. We also gathered evidence from financial transactions that [Rajaratnam] had made in the public record.

LD: The Supreme Court recently declined to hear an appeal by the 9/11 victims in [Motley Rice's] lawsuit against the members of the Saudi royal family. That case was dismissed on the grounds that the Saudis are afforded protection under the Foreign Sovereign Immunities Act. Are the 9/11 cases dead in the water?
Elsner: No. There are many other defendants that are not foreign sovereigns. We also have suits against a collection of charitable organizations and individual defendants who we allege are knowing contributors to Al Queda.

LD: Can you point to any successes your firm has had in bringing terrorism-related class actions?
Elsner: It's a little too early to tell. We've been successful in overcoming motions to dismiss and are in discovery in many of our cases. With respect to the 9/11 litigation, we just have to see at the end of discovery where weare at. But we will continue to pursue these cases. We believe that the law provides a remedy for U.S. and foreign victims of terrorists.

ri Lankan billionaire Raj Rajaratnam, who faces U.S. criminal charges that he earned millions of dollars trading on inside information, was accused in a civil lawsuit in New Jersey of financing attacks by the Tamil Tigers.

The suit was filed today by more than 30 victims and survivors of the Sri Lankan separatist group’s attacks. It also names J.M. Rajaratnam, the father of the founder of the Galleon Group hedge fund, and the Tamil Relief Organization, a Sri Lankan-based non governmental organization that the complaint says is controlled by the Tamil Tigers. The group is formally known as the Liberation Tigers of Tamil Elam and was designated by the U.S. Treasury Department as a terrorist group in 1997.

The plaintiffs claim to document the transfer of millions of dollars from Rajaratnam and his family’s foundation to the Tamil Relief Organization, which the Treasury Department in 2007 described as a front for the Tamil Tigers. Rajaratnam, his father and the Tamil Relief Organization were sued under the Alien Tort Claims Act, which allows U.S. courts to hear suits by noncitizens claiming violations of international law.

The three “have knowingly provided financial and material support to LTTE with the intent to advance the LTTE’s terror campaign,” according to the complaint.

‘Untrue and Libelous’

“The accusation that Mr. Rajaratnam supported the LTTE is flatly untrue and libelous,” his lawyer, Jim Walden of Gibson, Dunn & Crutcher LLP, said in a statement. “Mr. Rajaratnam has the greatest sympathy for all victims of violence in Sri Lanka and has a long history of helping Sri Lankans of all ethnic groups through substantial charitable donations over many years.”

At its peak, the Tamil Tigers controlled a quarter of Sri Lanka’s territory as part of its fight for a separate homeland in the country’s north and east. Besides the U.S., Sri Lanka, the European Union and India designate the Tamil Tigers a terrorist organization.

Rajaratnam, who is free on $100 million bail, was among six people arrested on Oct. 16 by federal prosecutors in New York and accused of trading stocks on inside information. He’s denied the charges. Prosecutors said they have taped conversations of him being tipped by some of the others in the case, including former executives at Bear Stearns Asset Management. Galleon Group managed about $3.7 billion before Rajaratnam’s arrest.

The New Jersey lawsuit was announced in a press release issued by lawyers bringing the case, including the firms of Motley Rice LLC of Mount Pleasant, South Carolina, and Newark, New Jersey-based Lite DePalma Greenberg & Rivas. The filing couldn’t be immediately confirmed independently.

The plaintiffs claim Rajaratnam made contributions to the Tamil Tigers individually, on behalf of his family’s charitable foundation, and as founder of a New York-based tsunami relief fund.

The case is Krishanthi v. Rajaratnam, U.S. District Court, District of New Jersey

Roomy Khan, the informant who is cooperating with prosecutors in the insider-trading case against Galleon Group LLC co-founder Raj Rajaratnam, previously worked at Intel Corp., according to two people who know her.

Information provided by Khan was central to the investigation that led to the arrests of six people, according to a person familiar with the probe, who asked not to be identified because Khan’s name wasn’t disclosed by the government. Khan’s link to Intel is significant because it shows that Rajaratnam may have had more than one inside source at the Santa Clara, California-based semiconductor maker.

Khan, identified by a U.S. Securities and Exchange Commission complaint as “Tipper A,” is a hedge-fund manager who worked for Galleon in the 1990s and sought to rejoin Rajaratnam in late 2005 when facing financial difficulties, according to the agency’s complaint. The Wall Street Journal first reported Khan’s identity yesterday. Khan is identified in the criminal case as “CW,” for cooperating witness.

The cooperating witness began helping the Federal Bureau of Investigation in November 2007 in its inside trading probe in the hope of receiving a reduced sentence, according to court documents. She agreed to plead guilty to charges of conspiracy and securities fraud.

Khan, who in May sold her house in Atherton, California, couldn’t be located. Chuck Mulloy, an Intel spokesman, declined to comment on whether she was ever an employee.

Rajaratnam Liquidating Funds

Rajaratnam, charged Oct. 16 by federal prosecutors with conspiracy and securities fraud, yesterday said he will liquidate his hedge funds, which managed about $3.7 billion. The billionaire also said he is innocent of the charges. New York- based Galleon has been approached by potential buyers of the company and some of its assets, according to a person familiar with the firm.

Rajaratnam is free on $100 million bond. He appeared in federal court in New York with his lawyer today, to post his Manhattan apartment as security for the bond.

The SEC complaint against Rajaratnam alleges he asked the informant if she had inside information about any public company. The witness promised to get access to information on Polycom Inc., a Pleasanton, California-based maker of videoconferencing systems. The two traded shares of Polycom many times, as well as shares of Google Inc. and Hilton Hotels Corp. where the informant got inside information, according to the complaint.

Intel Capital

Rajaratnam received tips on Intel, the world’s biggest chipmaker, from Rajiv Goel, director of strategic investments at its Intel Capital unit, according to the SEC.

SEC spokesman Kevin Callahan, Galleon spokesman Dan Gagnier and Janice Oh, a spokeswoman for the U.S. attorney’s office in Manhattan, declined to comment.

Defense lawyers whose clients are recorded on wiretaps typically try to discredit the testimony of cooperating witnesses, according to Nathaniel Burney, a former Manhattan prosecutor who is now in private practice.

“Informants are usually people who are already in trouble,” said Burney, author of a continuing legal education lecture titled “Hope for Hopeless Cases: Defending Wiretaps and Tape Recordings.”

A good defense lawyer will try to convince jurors that the cooperating witness manipulated the defendant to make him seem guilty, Burney said.

‘Get Someone Else’

“The only thing they can do to help themselves is to get someone else in trouble,” he said.

Besides what court documents show about Khan seeking leniency from prosecutors for her cooperation, she’s also been a defendant in at least two civil cases.

In a lawsuit settled last month, a housekeeper for Khan and her husband said they had violated minimum wage laws. The lawsuit was settled after a judge said that Roomy and Sakhawat Khan had fabricated evidence.

In March 2008, the Khans’ maid, Vilma Serralta, 69, sued the couple for denying her “lawful wages,” according to a complaint filed in U.S. District Court in the Northern District of California.

In the four years Serralta worked for the Khans as a live- in maid, she was paid between $1,000 and $1,300 a month, for 14- hour days that involved cleaning their 9,000 square-foot house, providing childcare and cooking, according to the complaint. That’s roughly $3 an hour.

Khan and her husband were also sued in 2005 in New York by Deutsche Bank AG, Germany’s biggest bank, for failing to repay a promissory note. They were ordered to pay $103,750, according to a settlement filed in New York Supreme Court.

Home Hedge Fund

Khan, 50, was a portfolio manager at a stock hedge fund run out of the couple’s home, said a person who knows Khan. She and her husband bought the house in Atherton, California, the richest town in Silicon Valley, for $10.5 million in January 2000, according to Zillow.com.

That same year, Silicon Storage Technology Inc. acquired Agate Semiconductor Inc., a company where Khan’s husband was president. Telephone calls trying to reach Sakhawat Khan through Silicon Storage weren’t answered.

The Khans sold the Atherton house in May for $9.4 million, according to Zillow.com. A new address and phone number weren’t available.

Junior Analyst

A key tip in the Rajaratnam case started with a junior analyst at Moody’s Investors Service, the Wall Street Journal reported yesterday.

The former analyst, Deep Shah, denied that he passed on any confidential information about Blackstone Group’s takeover of Hilton Hotels, which was cited in the Justice Department’s complaint, in exchange for money, the newspaper said.

Rajaratnam, who was born in Sri Lanka, was sued in New Jersey federal court today by a group of more than 30 victims and survivors of attacks by the Tamil Tigers, a separatist group. The victims claim Rajaratnam and his family foundation gave millions of dollars to the Tamil Relief Organization, which the U.S. Treasury Department in 2007 said was a front for the Tamil Tigers, designated by the U.S. as a terrorist organization.

Claiming he is innocent of all accusations brought against him, the Sri Lankan born billionaire Raj Rajaratnam, founder of the Galleon Group, a New York based hedge fund, in a letter to clients, employees and friends has assured investors of the liquidity of the funds of the group.


Rajaratnam was arrested by the Federal Bureau of Investigations (FBI) in the USA on the 16th of October for insider trading.
In his letter, Rajaratnam stated that he encouraged and invited investors of the group to attend daily research morning meetings. He also noted that this research process was the core of the investment and trading strategy of the organization.

He has further reiterated that he was innocent of all chargers and would defend himself against the accusations with the same intensity and focus that he had brought to managing investor capital.

Hedge fund hog Raj Rajaratnam, whose billion-dollar business imploded after he was charged with insider trading, was accused Thursday of bankrolling terrorists in his native Sri Lanka.

Rajaratnam was hit with a lawsuit while he was in Manhattan federal court, putting up his swanky Sutton Place pad as collateral for his $100 million bond.

He refused to speak with reporters and his lawyer later issued a statement denying he was in cahoots with terrorists.

"Mr. Rajaratnam has the greatest sympathy for all victims of violence in Sri Lanka and has a long history of helping Sri Lankans of all ethnic groups," said attorney Jim Walden.In a 90-plus page complaint, 30 survivors of Tamil Tiger bombing attacks claimed that Rajaratnam and his father funnelled more than $5 million to a charity that was really a front for the terror group from 2001 to 2007.

"The defendants, we allege, have the plaintiffs' blood on their hands," said Michael Elsner, a South Carolina-based lawyer who filed the suit in Newark federal court.

The State Department has designated the Tigers a terrorist organization.

The Sri Lankan government, which recently claimed victory over the Tigers, has also accused the New York-based moneyman of funding the terrorist group.

The lawsuit was filed under the Alien Tort Claims Act, which allows foreigners to sue in U.S. courts for violations of "the law of nations."

For more than 40 years, the Tigers waged a bloody war in a failed bid to created a separate Tamil state in northern Sri Lanka. The group was notorious for recruiting child soldiers and launching suicide bomb attacks.

Rajaratnam, 52, was arrested last Friday and charged with masterminding a $20 million insider trading racket. He denies any wrongdoing.

But after his arrest, the porky plutocrat pulled the plug on his hedge fund, the Galleon Group, which managed $3.7 billion at its height.