Danielle Chiesi, the former New
Castle Funds LLC consultant accused of passing inside information to Galleon
Group LLC founder Raj Rajaratnam and others, pleaded guilty to criminal
Chiesi, 45, recorded on federal
wiretaps cursing and fretting about being caught, was arrested and charged with
Rajaratnam, 53, in October 2009 in biggest U.S. crackdown on insider trading by
She was charged with conspiracy and
securities fraud, accused by prosecutors of making more than $4 million on the
Her plea brings to more than 15 the
number of people admitting guilt in the federal probe by the office of
Manhattan U.S. Attorney Preet Bharara.
Chiesi’s change of plea threatens
to complicate the defense of Rajaratnam, whose has pleaded not guilty to the
charges and whose insider-trading trial is scheduled to begin 28 February.
Rajaratnam, the billionaire founder
of Galleon, is the central figure in a three-year probe in which more than 20
people have been criminally charged.
Of the six people arrested on 16
October 2009 with Rajaratnam and Chiesi, all but Rajaratnam will have pleaded
The case is the first to target
significant insider trading on Wall Street in which prosecutors and the Federal
Bureau of Investigation made extensive use of phone tapping techniques used to
battle organized crime.
The Sri Lankan-born Rajaratnam is
accused of making more than $40 million in illegal schemes dating back to 2003.
Both he and Chiesi
were accused of profiting from tips provided by company executives, hedge-fund
employees and other insiders.