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Galleon's Rajaratnam, Chiesi Face New Indictments

A federal grand jury in New York has returned a new indictment against hedge fund mogul Raj Rajaratnam and former consultant Danielle Chiesi, sharply raising the stakes in what authorities had already called the largest hedge fund insider trading case in history.

Raj Rajaratnam
Raj Rajaratnam

The new indictment now says the pair netted $49 million from the alleged schemes. Previously, authorities said the illegal trading netted closer to $20 million.

A spokesman for Rajaratnam declined to comment.

The 19-count indictment appears to draw heavily on information from defendants who have pleaded guilty and agreed to cooperate since the original charges were brought in October.

They include former McKinsey partner Anil Kumar, who has admitted funneling inside information to Rajaratnam about the pending acquisition of ATI Technologies by Advanced Micro Devices in 2006. The new indictment says Kumar alone helped Rajaratnam to make $24.5 million in illegal profits.

In addition, the new indictment details the alleged role of former Intel executive Rajiv Goel, who pleaded guilty last week. According to the indictment, Goel supplied Rajaratnam with advance information about Intel's first-quarter earnings report in 2007, and the firm's plan the following year to invest in a joint venture involving Clearwire Corporation .

The indictment adds two new counts of securities fraud against Rajaratnam, who now faces up to 185 years in prison. He is free on a $100 million bond. Chiesi, a former consultant for New Castle Partners, is free on a $2 million bond. She faces 10 criminal counts and up to 155 years in prison.

Both are due in court Thursday afternoon.

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