Billionaire Prison Time
Here's how a hedge fund honcho managed incarceration
“I gave more to charity than what was alleged that I made. So how can you call me greedy?” - Raj Rajaratnam
A federal correctional officer received a two-year prison sentence this week for accepting payments from a felonious billionaire hedge fund manager under his watch.
The jailer going to jail is William S. Tidwell, 50, of Keene, New Hampshire, who pled guilty to taking $90,000 in benefits and getting a $50,000 loan from an “ultra-high net worth” inmate.
The wealthy inmate has been identified as Galleon Group hedge fund founder Raj Rajaratnam, who has not been charged in the case.
Raj who?
So much time has passed that I’ve forgotten about Rajaratnam, who was one of the highest-profile insider-trading targets of former U.S. Attorney Preet Bharara following the 2008 financial collapse.
Rajaratnam came to the U.S. from Sri Lanka and built a company that at one time managed about $7 billion in assets. Bharara came to the U.S. from India and made Wall Street history as one of the nation’s top white collar crime prosecutors.
Cue the Neil Diamond!
Bharara successfully prosecuted Rajaratnam for bagging $63.8 million in illicit profits from 2003 to 2009, trading in such stocks as eBay, Goldman Sachs and Google. A federal judge sentenced Rajaratnam to 11 years, the longest prison sentence ever imposed on an insider-trading convict.
“Raj Rajaratnam stood at the summit of Wall Street, commanding his own financial empire,” Bharara said following the judge’s ruling. “Mr. Rajaratnam stood convicted 14 times over of felonies, his empire exposed as a web of fraud and corruption that entangled many. … It is a sad conclusion to what once seemed to be a glittering story.”
Rajaratnam was released in 2019 after serving nearly eight years.
Instead of writing a glittering story – like Fivel in An American Tail (1986) or Eddie Murphy in Coming to America (1988) – he published a woe-is-me memoir, Uneven Justice,” in 2021.
So what was prison like?
“I went to bed overnight with a clear conscience and slept well,” Rajaratnam said in a 2021 interview with Forbes. “I felt I cleared my name but the jury saw it different. When they did, I walked into prison with my head high.”
Rajaratnam said he played bridge and chess with fellow insider trading convict Rajat Gupta, a former Goldman Sachs board member and managing director of McKinsey & Co.
He also wrote his book by hand, railing against the justice system one pen stroke at a time.
Tidwell made life more comfortable as Rajaratnam served his time at the Federal Medical Center Devens in Ayer, Massachusetts. Details of everthing Tidwell provided are thin, but you can bet it was more than a few extra trips to the commissary.
As a correctional counselor, Tidwell oversaw inmate work and housing assignments, legal calls and prison visits, according to the Justice Department.
“Tidwell developed a personal relationship with an inmate, accepted payments from the inmate, and lied to a bank about a loan he received from the inmate’s business associate,” said Special Agent Ryan Geach in a press release. “Tidwell’s conduct was a far cry from the integrity that we expect from federal Correctional Officers.”
Uneven Justice?
It’s difficult to dredge up sympathy for a billionaire felon, but in retrospect, Rajaratnam really got nailed.
Compare his punishment to that of Sun Microsystems co-founder Andreas Bechtolsheim. Without admitting wrongdoing, Bechtolsheim settled civil insider trading charges in March with a fine of $923,740 and an agreement not to serve as an officer or director of a public company for five years.
Bechtolsheim’s trades brought him a much smaller profit of about $416,000, versus Rajaratnam’s nearly $64 million, but it’s the same offense. Bechtolsheim was not prosecuted criminally, and his fine was pocket change for a billionaire.
I’d almost feel sorry for Rajaratnam if he wasn’t so unrepentant and didn’t talk about himself in the third person like a royal. I also find his charity defense comical.
“I just want to correct you on one thing,” he said in a 2021 CNBC interview. “I did not make a single cent. If everything I did was illegal, the money went to the investors. Right? It didn’t come to Raj Rajaratnam’s pocket. I gave more to charity than what was alleged that I was made. So how can you call me greedy?”
Corruption corrupts
Tidwell had been a prison-system employee since 2000. His lawyer told the court his career was "not without distinction and accolade." But a billionaire inmate under his watch may have been too much temptation.
Billionaires, as we have seen time after time, often come to believe they are above the rules and use the gravity of their wealth to suck others into their decaying moral orbits.
“William Tidwell is a longtime public servant, who fully embraced and handsomely benefitted from this illicit agreement with an inmate under his care,” said Special Agent Jodi Cohen in a press release. “Mr. Tidwell abused his authority and abandoned his duty, and in the end, this corruption cost him, landing him a stay in federal prison.”
Tidwell is not only going to the other side of the prison bars, but he’s been ordered to forfeit $95,058 and pay a $10,000 fine.
This is what he gets for sidling up to Rajaratnam. And he probably won’t be able to afford a luxury stay.
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I was in the courtroom when Rajarathnam was convicted. I helped cover the trial for the WSJ. I remember him. Not surprised he figured out who to bribe for special privileges. Once a conman...
Another good one. Did you read Cohan's prison interview with SBF in Puck?