In “Under the Bus” and “Never Trust the People You Cheat With” Category

When you are caught on a wiretap cursing, stewing, and fretting about being caught for insider trading, there are not many routes for your defense attorney to take.  Suppress the wiretapped conversations that indicate intent?  With that evidentiary fight lost, Danielle Chiesi, a fund manager, became the 17th person to enter a guilty plea in an insider trading ring that has resulted in criminal charges against charged 40 Wall Streeters and company executives.  Ms. Chiesi admitted that she acted as a conduit of confidential information from corporate insiders to hedge fund owner, Raj Rajaratnam and others. She, of course, made a little for herself  along the way.  The criminal charges put the amount at $1.7 million in illegal gains.

It was not as if Ms. Chiesi did not see it coming.  One conversation with an AMD executive included the following, “I swear to you in front of God. You put me in jail if you talk . . . I’m dead if this leaks.  I really am . . . and my career is over.”[1]  Her more salty language also emerged as she explained that she would be “like Martha ______ Stewart” if she was caught passing the information.[2]

The ring of epicenter Chiesi is nothing short of remarkable.  Oh, what a tangled web. A quick summary of who did what and where the pleas are helps us to understand why Ms. Chiesi felt betrayed by her friends, intimate and otherwise.  Here’s how it all played out:

Danielle worked as a portfolio manager at New Castle, CEO Mark Kurland, who was her former boss at Bear Stearns. Mr. Kurland and Ms. Chiesi had an affair.

Mr. Kurland entered a guilty plea and is serving a 27-month sentence.

Danielle had an affair with Robert Moffat, a former senior vice president at IBM/Sun Microsystems, who passed information along to her. 

Mr. Moffat entered a guilty plea and admitted he had an intimate relationship with Ms. Chiesi.  He is serving a 6-month sentence.

Danielle passed information along to Steven Fortuna at S2 Capital. 

Mr. Fortuna is a cooperating witness.

Danielle passed information along to Richard C.B. Lee, a hedge fund manager, and Ali Far, a partner, at Spherix Capital. 

Both are cooperating witnesses.

Of the six folks who were arrested on the day of the Raj and Danielle arrests, only Raj has not entered a guilty plea. 

Mr. Rajaratnam will stand trial.  He also lost the evidentiary battle.  So, the hedge fund owner stands alone.  He goes to trial in one month, can’t swing a deal with prosecutors at this late date, and will get to see a goodly number of the 25 who benefited from the passed-along information help the prosecution in exchange for lesser sentences that are now beyond his reach. 

You never trust the people you cheat with; they will throw you under the bus, even when there was a romantic relationship.

Ms. Chiesi’s demeanor and language have changed dramatically.  In court, she offered the following to the federal judge, “ This guilty plea causes me great pain, and I am deeply ashamed by what I did.  I ruined a 20-year career that I truly loved and have brought disrepute to an entire profession.”[3]  She also apologized to her sister and nieces who were in court with her. And so the Martha Stewart prediction came to pass.  Except that this plea is for insider trading, not obstruction of justce. 

 


[1] Peter Lattman, “Guilty Plea From Major Player in Galleon Insider Trading Case,” New York Times, January 20, 2011, p. B1.

[2] Susan Pulliam and Chad Bray, “Key Plotter Pleads Guilty in Galleon,” Wall Street Journal, January 20, 2011, p. A1. At p. A2.

[3] Lattman at p. B6.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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