What exactly is "justice" when it comes to convicted Wall Street fat cats? Is public shaming sufficient? How about being prevented from being associated with your industry forever? Is running an enormous Ponzi Scheme directly stealing hundreds of millions a crime punishable by spending time in the vicinity of the head of a corrupt hedge fund, or should Bernie Madoff be forced to bunk with the alleged Boston Marathon bomber?
These are some of the morally sticky questions being asked after the NY Post published a story claiming Galleon founder and convicted felon Raj Rajaratnam is "kickin' it big in the Big House- with a personal 'manservant' at his beck and call," says Post columnist John Crudele, citing a "prison insider."
The column triggered reactions that tended to share the Post's populist outrage, or defend the prison system and question Crudele's sourcing.
Rajaratnam's conviction was upheld by a federal appeals court, a ruling that suggests the government will be allowed to continue to use wiretapping in pursuit of insider trading suspects. According to Reuters, wiretaps were used to win convictions or guilty pleas on 73 defendants in an investigation first revealed in October of 2009.
So wiretaps are fine in both mob cases and in pursuit of hedge fund criminals. Putting the pieces together that means we're ok with guys like Rajaratman being locked up under the same conditions as murderers and drug kingpins. By implication that makes Rajaratnam roughly the equivalent of the late mafia kingpin John Gotti, except Raj will have paid his debt to society after 10 years whereas Gotti got life.
Gotti was convicted primarily by a combination of recorded conversations and the testimony of confessed underboss and murderer Sammy "The Bull" Gravano. Rajaratnam was convicted using a combination of recorded conversations and testimony of guys like confessed Galleon underboss ("trader") David Slaine.
Sammy the Bull confessed to a limited amount of criminal activity and was pushed into witness protection. According to Charlie Gasparino's excellent book "Circle of Friends: The Massive Federal Crackdown on Insider Trading" Slaine confessed to limited criminal activity yet was allowed to keep millions of dollars and now runs at least one business related to the training of dogs.
Should Slaine be forced to move to Tucson on a government allowance or should Sammy the Bull be working at a PetCo? If we use the model of Rajaratnam = Gotti and decide on degrees of punishment, should we only confiscate some of Slaine's money and make him move to, say, Pittsburgh under an assumed identity?
It doesn't really matter whether or not Raj Rajaratnam has a guy to give him a neck-rub while he does his time. What matters are the legal standards used to chase and convict criminals as we crack down on Wall Street fat cats. There are important things to talk about before we end up with mobsters, Madoff and Rajaratnam in the same three level bunk-beds. Those are the conversations we as a nation should be having.
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