Mark Kurland, a co-founder of the $1 billion New Castle hedge fund, was sentenced Friday, May 21, to two years and three months in jail and ordered to forfeit the $900,000 he earned in illegal insider trades.
The 61-year-old executive from Mount Kisco, New York, was the first to be sentenced in the Galleon Group case, an insider trading scheme that resulted in the arrests of top executives including New York billionaire Raj Rajaratnam, Galleon's founder.
In federal court in Manhattan, U.S. District Judge Victor Marrero said the defendant had a choice to be a leader of the financial industry, but instead "he became a joiner, surrendering to a spree of mob mentality" that nearly brought down this country's financial system.
Kurland pleaded guilty to charges of committing securities fraud, but he is not cooperating with prosecutors, unlike most others who have pleaded guilty in the case involving 21 people charged since October 2009. Those who are cooperating will face sentencing later.
Rajaratnam, 52, has pleaded not guilty for his alleged role as kingpin of the insider-trading ring that generated millions of dollars in illegal trades. Rajaratnam, ranked No. 559 on Forbes' 2009 list of billionaires, cut the insider deals with his network of Wall Street executives, federal prosecutors say.
New Castle Partners operated as the equity hedge fund group of Bear Stearns Asset Management Inc. until J.P. Morgan Chase & Co. acquired Bear in March 2008. In January 2009, New Castle Partners ended its affiliation with JPMorgan and formed a new hedge fund, New Castle Partners LP., in January 2009, according to published reports.