In a ruling handed down yesterday, ever-present U.S. District Court Judge Jed Rakoff ordered former Goldman Sachs board member Rajat Gupta to pay Goldman $6.218 million in restitution. The $6.218 million was for legal fees Goldman paid to a law firm related to the criminal insider trading case against Gupta that resulted in his conviction on three counts of securities fraud and one count of conspiracy, and a two-year prison sentence.
The court found that Goldman was entitled to restitution under a statute called the Mandatory Restitution Act of 1996, which provides for restitution — including attorneys’ fees — in a criminal case where an identifiable victim has suffered a pecuniary loss. Goldman submitted 542 pages of billing records from its counsel in the case, Sullivan & Cromwell. Although Gupta sought to limit the fees for which he might be liable to those incurred during his prosecution, Judge Rakoff found that he had “no difficulty in concluding, by a preponderance of the evidence, that nearly all of the expenses Goldman Sachs here claims were the necessary, direct, and foreseeable result of the investigation and prosecution of Gupta’s offense” and well within the statute’s coverage.
