After insider-trading conviction, a new life as a speaker

A few years ago, it would have been hard to imagine Judge Jed S Rakoff and Roomy Khan, a government informant, as speakers at the same conference.

But that's exactly what happened this week, when Judge Rakoff kicked off the Association of Certified Fraud Examiners 27th annual global fraud conference in Las Vegas on Monday and Khan closed it with her talk on Wednesday.

Khan is known for helping investigators crack open the government's case into insider trading at the Galleon Group hedge fund.

Judge Rakoff is a highly respected judge for the Federal District Court for the Southern District of New York and is known for his sharp wit and command of the law. He was also the judge responsible for sending Khan to a year in prison in 2013 after she was convicted of illegally passing inside information and obstructing justice. Over the course of a decade, Khan supplied corporate secrets to Raj Rajaratnam, the founder of Galleon, and, in some instances, traded on the information herself.

Though many cooperators in the Galleon case, like Anil Kumar, a former McKinsey & Company senior partner, and Rajiv Goel, an Intel Capital executive, avoided prison terms, Judge Rakoff took a hard line with Khan. In handing down the sentence, Judge Rakoff cited her "whole series of lies."

"You cannot have it both ways to cooperate and obstruct justice," he concluded.

That was three years ago.

Since getting out of prison in the spring of 2014, Khan has been busy refashioning her image, giving lectures to students at business schools and delivering talks to compliance officers.

When Khan spoke at the fraud conference on Wednesday, she was not compensated for the engagement. She told the 2,500 lawyers, internal auditors, forensic accountants and others how she threw away some "lucky breaks" and "a ton of hard work" by making some "reckless choices" in her life.

Sitting in the audience was her 17-year-old daughter, Priyanka, who was only 10 when the Galleon case broke.

Two days earlier, Judge Rakoff opened the conference by railing about the lamentable lack of prosecutions of individuals involved in the mortgage fraud bubble nearly a decade ago.

Before starting his speech, Judge Rakoff said he was sorry he could not stick around to listen to Khan's talk.

"The last time I saw Roomy was when I sentenced her to prison," he noted, as the audience erupted in laughter and applause.

"But in all seriousness," he continued, "I understand she has become a very articulate spokesman for the more aggressive prosecution and the detection of fraud."

Judge Rakoff's assessment was on target.

Khan described gathering inside information as part of her "job training and also part of the job requirement and expectation" of a Wall Street investment analyst.

She explained that she did not consider that she was doing anything wrong because there was "no visible victim" in insider trading: "We're not stealing from anybody; we are not putting our hand in anybody's pocket," she said. And, like others on Wall Street, she believed that "the law was messed up."

But "as I learned over time, disagreeing with the law doesn't give us a right to break it," she said.

Perhaps the most powerful part of Khan's speech was her focus on the impact the Galleon case had on her family. She said her daughter had confided in friends at school about the possibility of her mother going to prison.

"She became a pariah in her school," Khan told the audience. "Her guidance counsellor called us to discuss this matter."

Khan's father, who lived in India and had worked hard so she could have a career, had to come to terms with the idea that his daughter was a felon, she told the audience.

"And the breach of the faith of honesty with my own spouse, it is hard for me to explain how it has impacted my own life," she said.

A few years ago, it was difficult to imagine Khan ever rehabilitating herself. Even she doubted it. Often, in the course of conversations, she would break down, crying at the prospect of her life ahead.

Many of the cooperators in the Galleon case have struggled. Adam Smith, who went to Harvard and rose to be a portfolio manager at Galleon before pleading guilty to securities fraud, faced challenges finding steady work. Kumar, the McKinsey consultant, had to return to India to find paid work.

But Khan may turn out to be the one cooperator in the Galleon case who succeeds in landing a second act in life.

©2016 The New York Times News Service