July 1, 2011 1:26 PM
Ex-Ropes & Gray Lawyer Gets 30 Months in Galleon Insider Trading Case
Posted by Brian Baxter
Citing a need to send a stern message about the violation of client confidences, a federal judge in Manhattan sentenced former Ropes & Gray corporate associate Arthur Cutillo to two and a half years in prison on Thursday for his role in the Galleon Group insider trading case, according to sibling publication the New York Law Journal.
Cutillo, who was arrested in November 2009 and disbarred last month, pleaded guilty in January to insider trading and conspiracy charges in connection with his participation in an insider trading ring linked to Galleon CEO Raj Rajaratnam.
Rajaratnam himself was found guilty in early May of 14 counts of securities fraud and conspiracy. On Thursday, a federal district court judge in Manhattan agreed to postpone Rajaratnam's sentencing until September 27. The hedge fund billionaire had previously been scheduled for sentencing July 29.
At Cutillo's sentencing, U.S. district court judge Richard Sullivan said he felt sorry for Cutillo's wife and the couple's four children, two of whom have special needs, according to the NYLJ. Despite the family's hardship, Sullivan said he felt obliged to hand down a stiff sentence against Cutillo to protect confidence in the financial system and the legal profession.
Sullivan said that Cutillo violated a fundamental obligation of lawyers "to respect and protect the confidences of their clients.... You were financially comfortable, you were a respected attorney making more than $200,000 a year and yet it wasn't enough," according to the NYLJ.
Cutillo, 34, was represented at the hearing by Catherine Redlich of New York's Driscoll & Redlich. The NYLJ reports that Redlich told the judge that her client had entered a dark period after the death of his younger brother to a probable drug overdose in 2007. Prosecutors showed no sympathy, the NYLJ reports, arguing that Cutillo knew the consequences of his actions and simply should have known better.
Cutillo and two others--Jason Goldfarb, a personal injury lawyer and Cutillo's former college roommate, and Brien Santarlas, another ex-Ropes associate--have admitted to being paid $32,500 by ex-Galleon Group trader Zvi Goffer to funnel information on confidential deals to Goffer and coconspirators.
Goldfarb pled guilty to insider trading charges in April; Santarlas did the same in December 2009 and settled related SEC charges a year ago. He was disbarred in November and earlier this year testified at Goffer's insider trading trial in federal court in Manhattan.
As previously noted by The Am Law Daily, during his testimony Santarlas described "snooping around" Ropes & Gray's offices to obtain information on firm clients to trade to Goffer and his colleagues for cash. A federal jury found Goffer guilty in June.
Cutillo spoke briefly at his sentencing, telling the court, "I just want to apologize to everybody." He said he would always be "ashamed" of betraying his firm and its clients, according to the NYLJ.
In addition to the prison time Cutillo must serve, he and Santarlas also face a $378,068 forfeiture judgment entered by Sullivan. The NYLJ reports the sum represents the amount of money Goffer netted in the scheme.Make a comment