Federal prosecutors have sought 8-10 years in jail for Indian-American Goldman Sachs director Rajat Gupta for his “shocking” insider trading crimes even as he pleaded to be spared a prison term and offered to perform community service in Rwanda.

The prosecutors and Mr Gupta’s defence team each submitted their sentencing memorandum in US District Court in New York on Wednesday, a week before US District Judge Jed Rakoff sentences Mr Gupta on insider trading charges.

In a 12-page memorandum, Manhattan’s top federal attorney Preet Bharara said a “sentence within the applicable guidelines range of 97 to 121 months imprisonment is appropriate” for Mr Gupta, who repeatedly flouted the law and abused his position of trust and in his “callousness and above-the-law arrogance” committed crimes which were “extraordinarily serious and damaging to the capital markets.”

“Gupta’s crimes are shocking,” Mr Bharara said arguing that, “a significant term of imprisonment is necessary to reflect the seriousness of Gupta’s crimes and to deter other corporate insiders in similar positions of trust from stealing corporate secrets and engaging in a crime that has become far too common.”

Prosecutors said Goldman Sachs, which was “an identifiable victim of Gupta’s criminal conduct,” is seeking restitution to the amount of $6.8 million, including the fees the company incurred in the course of investigations and legal proceedings as well as a portion of the compensation that Goldman paid to Mr Gupta as a director.

They said Mr Gupta should also forfeit $1,150,000, which is 10 per cent of the trading gains hedge fund founder Raj Rajaratnam made as a result of Mr Gupta’s illegal tips to him.

In his sentencing memorandum, Mr Gupta’s lawyer Gary Naftalis sought probation and said his client is ready to perform a “rigorous full-time programme of community service.”

The offers for community service involve working with homeless and runaway youth as well as “a less orthodox but innovative proposal” of living in the backward districts of Rwanda and working with the local government on health care initiatives with particular focus on HIV/AIDS and malaria and agricultural development.

Mr Naftalis said Mr Gupta’s “once sterling reputation, built over decades, has been irreparably shattered, and his business and philanthropic accomplishments tainted”.

Mr Gupta’s “monumental fall” is itself severe punishment and courts have previously recognised that “if used wisely, probation is sufficiently serious punishment to satisfy the statutory mandate that the sentence reflect the seriousness of the offense and provide just punishment”.

Mr Gupta, 63, is the most high profile Wall Street executive to be convicted in the government’s crackdown on insider trading.

Mr Rajaratnam is currently serving an 11 year prison term after being convicted last year.

Prosecutors argued that while Mr Gupta’s criminal conduct appears to be a deviation from an otherwise law-abiding life, his crimes were not an isolated occurrence or a momentary lapse in judgement.

“Indeed, the opposite is true. Gupta repeatedly tipped Rajaratnam with corporate secrets for nearly two years. And the ease with which he disclosed confidential information to Rajaratnam...reflects the total disregard he showed for his fiduciary duties and the callousness with which he handled confidential information,” the prosecutors argued.

Mr Gupta was found guilty by a jury in June this year on three counts of securities fraud and one count of conspiracy.

The securities fraud carries a maximum prison sentence of 20 years and the conspiracy carries a five-year jail term.

Mr Gupta’s sentencing comes exactly a year after Mr Bharara filed insider trading charges against the former McKinsey head.

Mr Gupta was convicted of leaking board room secrets of Goldman Sachs to Mr Rajaratnam, including information about a five billion investment by Warren Buffett’s Berkshire Hathaway in September 2008 and a tip on a quarterly loss.

The jury had acquitted him of two charges of leaking information that Cincinnati-based P&G’s organic sales growth would fall below estimates and tipping Mr Rajaratnam about Goldman Sachs’s earnings in the first quarter of 2007.

Mr Bharara said instead of serving the interests of the shareholders, as was his obligation as director, Mr Gupta used the confidential information he learned as a board member to help Mr Rajaratnam make millions of dollars in illegal profits, at the expense of the public.

“Gupta was deceptive and dishonest” with the other members of the Goldman and Proctor and Gamble boards.

“His repeated conduct over nearly two years demonstrated an utter lack of respect for the law. In committing his crimes, Gupta displayed an above-the-law arrogance and never expressed any concern about the harm he was causing to Goldman Sachs, P&G, the markets, or other investors,” Mr Bharara said.

Mr Bharara pointed out that Mr Gupta has submitted letters by friends and acquaintances to the court that speak about his incredibly successful career and his participation in a number of charitable organisations.

Among the 400 letters of support that Mr Gupta’s lawyers have submitted in court are those by former UN Secretary General Kofi Annan, Microsoft co-founder Bill Gates, Nobel laureate Amartya Sen and Biocon Chairperson Kiran Mazumdar Shaw as well as several of Mr Gupta’s former McKinsey colleagues.

“The court can and, of course, should take that good conduct into account in fashioning an appropriate sentence. On the other hand, Gupta took advantage of the trusted relationships that he had built from a lifetime of good conduct to violate the law at the expense of the public and the companies he was supposed to serve,” Mr Bharara said.

Mr Naftalis said while Mr Gupta is prepared to undertake any community service the court considers appropriate, he offered two specific programmes that Mr Gupta could undertake.

Mr Naftalis said Mr Gupta could work with Covenant House, which provides emergency shelter and other services for homeless, runaway and at risk youth.

“Gupta would provide direct services to these children at Covenant House’s New York site, including working as part of the intake team at the Crisis Centre, and assisting participants in the transitional living programme known as ’Rights of Passage’ and in job training.

“In addition, he would assist Covenant House in developing a plan to implement a set of strategic initiatives for the organisation,” Mr Naftalis said.

The second offer for community services involves Mr Gupta living in the rural districts of Rwanda and working with government officials and humanitarian organisation ‘CARE USA’ to help implement the country’s initiative to improve delivery of health care and agricultural development.

“We recognise this is an unusual community service proposal, but one that could potentially provide great benefits to large numbers of Rwandans desperately in need of help, and which Gupta is uniquely situated to perform,” Mr Naftalis said.

“Moreover, it would require Gupta to confront significant hardships and would thus constitute punishment commensurate with the seriousness of the offense, as Gupta would be thousands of miles from his family and friends, and would be living in basic accommodations in rural areas of the country,” Mr Naftalis added.

He said while white-collar offenses are “gravely serious” and demand “considerable punishment,” the court has previously found that “probation and home detention could accomplish the goals of punishment more effectively than imprisonment and that not all defendants must be sentenced to imprisonment to be duly punished.”

He said the Rwandan government has expressed support for a programme of service in which Mr Gupta would “work with rural districts to ensure that the needs to end HIV, malaria, extreme poverty, and food security, are implemented.”

According to Mr Naftalis, Rwandan Minister of Justice and Attorney General Tharcisse Karugarama has said the Rwandan government would accept “responsibility for crafting a (specific) programme of work, for the terms imposed on Mr Gupta being carried out, and to ensure that regular reports are provided to the appropriate authorities in the United States by the Ministry of Justice/Attorney General’s office.”

“Gupta, and his contributions to Rwanda and other developing countries, are well known to us. We believe he can make a significant difference in helping us to accomplish the aforementioned objectives (ending HIV, malaria and extreme poverty and ensuring food security),” Mr Naftalis quoted Mr Karugarama as saying.

Mr Gupta would live in the rural districts and in turn would experience a “measure of real sacrifice, thousands of miles from his family and living in spare, rural accommodations, that is, it would be punishment reflecting the seriousness of the offense of which he was convicted, while at the same time enabling him to give back to society and employ his talents in a country, and in a manner, consistent with US interests,” Mr Naftalis said in the memo.

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