July 20, 2011 10:13 pm

Chiesi sentenced to 30 months

Danielle Chiesi, the former Bear Stearns hedge fund trader and ex-beauty queen who became the star of the government’s insider trading case against Raj Rajaratnam, has been sentenced to 30 months in prison for her involvement in the Galleon Group founder’s scheme.

Ms Chiesi, who pleaded guilty to three conspiracy charges in January, never testified against Mr Rajaratnam but stole the show during his trial as jurors listened to dozens of recorded phone calls between the two.

Her court appearance on Wednesday marked the first sentencing of a major defendant in the case. As part of her plea bargain, the US government had agreed a sentencing range of 37 to 46 months, at the discretion of the judge.

“The message to Wall Street needs to be loud and clear: If you trade on inside information, you will be caught; if convicted, you will be sentenced to prison,” said Richard Holwell, the federal judge who pronounced the sentence.

Ms Chiesi, who wore a pale pink sleeveless silk dress and a pearl necklace, was also sentenced to two years of supervised release and 250 hours of community service.

“It won’t happen again,” she told the judge just before being sentenced. Her lawyers had asked the judge for leniency, saying that Ms Chiesi was manipulated by Mark Kurland, her former boss and lover, who was the first defendant sentenced in the case.

Mr Rajaratnam was convicted in May and faces a September 27 sentencing, also by Judge Holwell.

Prosecutors called Ms Chiesi the “consummate Wall Street insider”. They said she would use her charm and physical appeal to talk up powerful sources, getting inside tips about corporate activity that she would then pass on.

In a statement as part of her plea bargain in January, Ms Chiesi told the judge she was “deeply ashamed” and apologised to the many people she said she had hurt, including her family. She said she did not personally profit from the trades.

Prosecutors said Ms Chiesi had made $4m from illegal trades involving technology companies such as Advanced Micro Devices, Akamai Technologies and IBM.

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