Disgraced billionaire Raj Rajaratnam who is serving an 11-year sentence in federal prison for insider trading is facing a new lawsuit, this time in New York bankruptcy court.
An adversary proceeding filed April 18 by Alan Nisselson, trustee overseeing the liquidation of Galleon, says Rajaratnam paid himself around $131 million from Galleon Management LP, one of his company's units while he faced insider trading charges in 2010.
Also named in the suit are former Galleon executives George Lau and Richard Schutte.
According to the lawsuit Rajaratnam received $US13 million from selling a claim in the Lehman Brothers bankruptcy that had been held by a Galleon fund. Some of the money was described as salary, but the trustee sees the amount transferred as “far in excess” of any salary owed to Rajaratnam.
On Dec. 21 and 22, 2010, Galleon Management paid out $40 million and $78.5 million to Rajaratnam as "deferred fees" and "capital," which the lawsuit says is ”far in excess of any consideration received” by Galleon Management from its founder.