Business Insider | 2011

Published on October 12, 2012 by Lisa Du

The Worst-Case Scenario For Raj Rajaratnam: Peeling Potatoes For 12 Cents An Hour

In the worst case scenario, Raj Rajaratnam could be in prison for the next 25 years and peeling potatoes to the tune of $0.12 an hour, according to Larry Levine, a federal prison consultant.

To be fair, Levine told Business Insider that the pay rate does eventually go up – to around $0.40 per hour – and there’s a range of other jobs in prison, from filing papers to raking leaves to mopping floors.

Some legal experts also anticipate that U.S. District Judge Richard Holwell may settle on a less severe sentencing for the ex-hedge fund owner.

The Galleon Group co-founder will be sentenced tomorrow after being convicted in May on 14 counts of securities fraud. Prosecutors are seeking 19.5 to 24.5 years for reaping an alleged $72 million in illicit profits. Those figures have been widely disputed by Raj’s lawyers, who say he gained around $7.4 million and are asking for a maximum of eight years.

“I think his lawyers are dreaming if they think he’s going to get such a low sentence,” Levine said. He told Business Insider that he expects Raj to get 20 to 25 years.

“The more victims you have, the more time you get. The higher the dollar loss, the more time you get,” Levine said, referring to U.S. sentencing guidelines. “The problem with Raj is that his dollar loss is off the scale,” referring to the illegal gains he made.

Levine, who served 10 years in federal prison for drug trafficking and securities fraud, now runs Wall Street Prison Consultants, an agency that helps those charged with financial crimes. In the past, he consulted the Madoff family and has also advised other high-profile clients.

It’s likely Raj will end up in a medium-level security prison because of the long sentence that’s expected. “He’ll be in there with bank robbers and killers and dangerous people,” Levine said. He added that lawyers trying to use Raj’s health problems for a lighter sentence or more comfortable prison is a “pipe dream.”

Convicted persons are usually sent to prisons within 500 miles of their residence, but that’s not set in stone.

“It’s a federal system. If they don’t have bed spaces that are open they can send you anywhere. He could end up on the West Coast, he could end up in Texas. And there’s nothing he can do about it,” Levine said.

Levine also had some advice for Raj’s impending prison life. “What I would suggest he do is humble himself by showing some respect for people.” Then he touched on another sensitive issue – “He needs to get an exercise program together.”