Raj Rajaratnam’s name first transpired in US probe on LTTE
By EVAN PEREZ and MATTHEW ROSENBERG
WASHINGTON—The hedge-fund billionaire charged as part of a vast insider-trading case surfaced in an earlier, separate probe into U.S. fundraising by a Sri Lankan terrorist group, people familiar with the probe said.
As part of that investigation, federal agents said they uncovered documents showing that Raj Rajaratnam, founder of the Galleon Group, was among several wealthy Sri Lankans in the U.S. whose donations to a Maryland-based charity made their way to the Liberation Tigers of Tamil Eelam, according to people familiar with the probe.
The LTTE, commonly known as the Tamil Tigers, fought a brutal separatist war carrying out suicide bombings and political assassinations against the government of Sri Lanka from 1976 until it was defeated in May.
Mr. Rajaratnam, 52 years old, was among six people arrested Friday in what the Federal Bureau of Investigation said is the largest-ever, hedge-fund insider-trading case. Federal prosecutors charged Mr. Rajaratnam with securities fraud and conspiracy to commit securities fraud.
Citing telephone wiretaps, a federal criminal complaint filed in U.S. District Court for New York's Southern District describes a period from 2006 and 2008 when Mr. Rajaratnam and his group allegedly swapped inside information. Prosecutors allege Mr. Rajaratnam and his ring of alleged co-conspirators earned $20 million in improper gains. Mr. Rajaratnam's New York-based Galleon fund firm manages $3.7 billion.
There doesn't appear to be a connection between the two investigations.
Jim Walden, an attorney for Mr. Rajaratnam, said his client is innocent and will fight the insider-trading charges. Mr. Walden said Mr. Rajaratnam made charitable donations "to rebuild homes destroyed by the Tsunami" that devastated Sri Lanka and other countries in 2004, and that he wasn't involved with the LTTE.
Mr. Rajaratnam wasn't charged in the terrorism probe, which was led by the FBI and federal prosecutors in Brooklyn, Eight other people have pleaded guilty to attempting to provide material support to the group, designated as terrorist by the U.S.
Prosecutors in the cases do not allege that Mr. Rajaratnam and other donors knew their contributions were routed to the Tamil Tigers.
Documents in a federal criminal complaint filed in U.S. District Court in New York's Eastern District include allegations by federal agents that money donated to a U.S. charity called Tamil Rehabilitation Organization, or TRO USA, of Cumberland, Md., was funneled to the Tamil Tigers insurgency.
The case was brought against Karunakaran Kandasamy, described by prosecutors as the head of the U.S. branch of the LTTE. He pleaded guilty in June to providing material support to a terrorist group. His attorney said Mr. Kandasamy is awaiting sentencing.
In the same case, an FBI agent cites documents uncovered in court-authorized searches as showing donations to TRO USA made by a person identified only as "individual B." Mr. Rajaratnam is the person identified as "individual B," according to people familiar with the probe.
"Individual B" made donations to TRO USA totaling $1 million in 2000, according to bank records cited by the FBI. In 2004, "individual B" made another $1 million donation, according to bank records cited by the FBI. The funds were then wired to the TRO organization's Sri Lanka bank accounts.
Mr. Kandasamy, according to the federal complaint, told investigators the Tamil Tigers controlled the TRO charity. Another alleged TRO USA fundraiser indicted separately, said in FBI recorded conversations that "'individual B' made one of those $1 million donations to the LTTE after its successful 'Elephant Pass' attack," said to be one of the biggest military victories by the Tigers in their war against the Sri Lankan government, according to the FBI complaint.
In response to an FBI raid on TRO offices in 2006, the organization said it was a relief organization, and that its only relationship with the Tamil Tigers was in the course of the work conducted in regions then controlled by the LTTE.
Mr. Walden said Mr. Rajaratnam's donations "was responsible for rebuilding thousands of homes for Tamils, Sinhalease, and Muslims without discrimination. He obviously had the homes rebuilt, as they are standing today. Go see them."
The arrest of Mr. Rajaratnam and a couple of others of Indian origin was the talk of the weekend, coming during Diwali, one of the most important Hindu festivals, which is celebrated with lighting of candles and fireworks. Many South Asians gather at temples and people's homes, and "it was all anyone could talk about," said a person who knows Mr. Rajaratnam. "We are all trying to figure out if we can help in any way because he has been so generous but it's difficult to say what one can do given that it's now a judicial case."
Mr. Rajaratnam was a frequent contributor to various causes, from those that promoted development in the Indian subcontinent to programs that benefited lower income South Asian youth in the New York area.
He was also active politically. Data from the Center for Responsive Politics, a non-partisan group that tracks political contributions, shows that Mr. Rajaratnam donated $26,200 to the Democratic Party's fundraising arm in 2007. He also provided $4,600 in 2007 to the campaign of Hillary Clinton, now Secretary of State, and $4,600 in 2008 to the campaign of President Barack Obama [courtesy: The Wall Street Journal]