Danielle Chiesi -After Pleading Guilty in the Biggest Hedge Fund Insider Trading Fraud and 15 Months of Prison Time Hot Femme Fatale Analyst Back From Prison as She Swaps Cell for Bronx Halfway House.
Danielle Chiesi, the femme fatale analyst returned from 15 month Virginia prison camp for passing illegal stock tips to hedge fund manager Raj Rajaratnam.
Insider probe initially centered on hedge fund manager Raj Rajaratnam, the Galleon Group LLC co-founder who was convicted in 2011 of conspiracy after an eight-week trial. The Sri Lankan born hedge fund manager, who allegedly earned at least $45 million on tips from corporate insiders, is serving an 11-year prison sentence.
At hedge fund titan Raj Rajaratnam trial, prosecutors played wiretapped recordings of his conversations with Chiesi, who worked as an analyst at New Castle Funds LLC in New York.
In one, they speculated why another trader bought 1 million shares of Advanced Micro Devices Inc. (AMD) before the public disclosure of a transaction between AMD and Abu Dhabi’s Mubadala Development Co. Prosecutors said they had a tip.
“That’s a very bold move to make,” Chiesi said on the recording. “Do you think somebody knows what we know?”
Former beauty queen Danielle Chiesi pleaded guilty to conspiracy before the trial and went to prison in October 2011. In her guilty plea, she admitted that she solicited inside tips from technology industry executives. Among them was Robert Moffat, a former International Business Machines Corp. executive with whom she had an intimate relationship, he said in his guilty plea. Moffat got a six-month sentence.
“I was complicit,” Chiesi said.
Danielle Chiesi pleaded guilty to conspiracy before the trial and went to prison in October 2011. In her guilty plea, she admitted that she solicited inside tips from technology industry executives.
Raj and Chiesi had been discussing her relationship with Robert Moffatt, a senior VP at IBM who was expected to play a big part in AMD’s new deal, a cash injection from Mubadala or Abu Dhabi.. Chiesi of course knew what Moffat was thinking because she had an “intimate relationship” with Moffat, which he later described as her “playing him.”
But here’s what Raj Rajarataram and Chiesi had to say about him over their phone conversation about Moffat.
Chiesi: My parents have a lake house in Candlewood and so Moffat and his daughter are coming this weekend.
Raj: Moffat has kids?
Chiesi: Yeah he’s married and has kids. Why are you surprised?
Raj: I thought he was single. He looks like a single guy, you know, he’s got a swagger.
Chiesi: No he’s more like the geeky type, not charming like how you are.
Chiesi did her time in Alderson, West Virginia, at a minimum-security camp in the foothills of the Allegheny Mountains. Martha Stewart was once jailed there for lying to authorities about her sale of stocks.
Chiesi’s home was an 8-foot by 10-foot cubicle. Her cellmate was doing time for a drug offense, as were many at the prison. She spoke to family on brief phone calls and tutored other inmates in math. She went running and tried to exercise in a sparse gym that lacked weights.
Chiesi said she earned respect from fellow inmates because she hadn’t cooperated with prosecutors.
“Not being a rat works,” she said.
“I didn’t talk, I didn’t speak, I kept to myself,” Chiesi said of a term she described as “very difficult.” Her cellmate was “an inspiration” who “really helped me get through.”
At her sentencing, Chiesi’s lawyers argued that her former boss, Mark Kurland, co-founder of New Castle Funds, had used their sexual relationship to manipulate her into feeding him tips. Chiesi yesterday asked about Kurland, who was sentenced to 27 months in the case.
“I want to know what Mark Kurland is doing now,” she said.
Chiesi’s lawyer, Don Buchwald, said in an interview yesterday that Chiesi must serve an additional two years on supervised release, a form of probation, after she leaves the halfway house.
Chiesi says she’s is eager to move on with her life.
“I don’t have a career anymore, but I have drive and ambition, and I will make it work,” she said. “I’m back.
Chiesi left Alderson in early January after shaving time off her sentence for good behavior and participation in a drug and alcohol program. She headed for the community-based “re-entry” program in the Bronx, where she’ll spend six months before returning to an apartment in Manhattan.
“When my family picked me up, you cannot even believe the feeling,” Chiesi said. “I had my mom, my brother, my sister, my nieces. They drove outside of the Alderson gates, and I jumped out of the car. It was surreal.”
“All I could say was, ‘I did it,’” she said.
Today, Chiesi is living on a tree-lined Bronx street that’s a far cry from the tony midtown Manhattan neighborhood that was once home. She has a room in a five-story facility housing men and women which is staffed by security officers guarding the entrance. Nearby are shuttered storefronts and a jeans shop selling $6 tank tops.
Chiesi, who is working for her brother in a job she declined to identify, comes and goes without an escort.
“Life is hard,” she said. “I didn’t come back to something that’s perfect.”
Marijuana was her biggest worry
When the fuzz first showed up at the doorstep of Danielle Chiesi, insider trading for the Galleon Group wasn’t the first thing she was worried about.
She walked into the hallway of her Manhattan apartment, worried about letting the agents in because they might find a marijuana joint in the apartment from a party the night before, according to a person familiar with the matter.
When the agents asked her if she had a weapon, she told them she had a fish and a cat, the person says.