NY lawyers: Affair with boss led to inside trades

NEW YORK (AP) -- Lawyers for a woman blamed by an insider trading co-defendant for using pillow talk to get inside secrets faulted her boss on Monday, saying he bullied her during a 20-year affair to make her get illegal secrets for him.
The lawyers, seeking leniency for Danielle Chiesi, wrote in a submission to a federal judge in Manhattan that Chiesi was manipulated by her boss, Mark Kurland, for nearly two decades as he carried on the affair, which began when he was 40 years old and she was 22.
Chiesi, now 45, pleaded guilty in January to conspiracy and securities fraud charges, and her voice was heard frequently on audio tapes played last month at the trial of her friend Raj Rajaratnam, a one-time billionaire hedge fund founder awaiting sentencing in what prosecutors say is the biggest case ever to result from hedge fund insider trading. The conviction of three more defendants by a jury Monday means all of more than two dozen people arrested in the case have been convicted.
Chiesi's lawyers asked a judge to reject the government's request that Chiesi be sentenced to three to four years in prison, saying she is less culpable than Kurland, who already has been sentenced to two years and three months behind bars.
They wrote that Kurland was more than Chiesi's boss while she worked at New Castle, which was the equity hedge fund group of Bear Stearns Asset Management Inc.
"He was also her lover, for almost 20 years," they said. "Dani was and will say today that she still is in love with him. She resists the idea that Kurland used her for his own purposes, and the truth of that long relationship is probably far more complicated than any of us can know."
But the lawyers urged the judge to consider "objective facts" at sentencing, including that Kurland tried to take advantage of contacts and connections he knew Chiesi had with people in high positions at public companies.
"He encouraged her to cultivate those contacts and connections, he urged her to get inside information from those people, at times flattering her information-getting abilities, and at the same time belittling her understanding of financial numbers," they wrote.
The lawyers said those close to Chiesi knew of the "toxic `relationships' she had with men, including her abusive ex-husband and especially with Mark Kurland. They understood that her emotional and financial well-being were inextricably linked with Kurland."
They cited a submission by Chiesi's boyfriend, identified as Billy, who wrote that the "false bravado and confidence" Chiesi displayed on audio tapes recorded by the government masked the product of years of abuse. Billy noted that she had made donations to shelters for battered women.
The lawyers also cited his description of Kurland as engaging in a "vicious cycle of abuse" and "psychological exploitation" to turn Chiesi into his "virtual servant," even getting her to relocate to San Francisco after his wife learned of their affair.
Messages for comment left with four lawyers for Kurland were not immediately returned Monday.
Chiesi's lawyers also noted that former IBM executive Robert Moffat was sentenced to six months in prison after pleading guilty in the case. Moffat admitted that his romantic feelings for Chiesi clouded his judgment. Moffat's lawyers said Chiesi "played" him by using their intimate relationship to get confidential information.
At her January plea, Chiesi said she was deeply ashamed and was upset she had ruined a 20-year career at a company where prosecutors said inside trades resulted in $1.7 million in illegal profits, a small portion of more than $50 million in illegal profits participants earned in the overall scheme.
Prosecutors, in a court submission of their own Monday, said Chiesi should not get leniency because her crimes were not "garden-variety insider trading."
"She obtained inside information from some of the highest level executives in the United States," they said.
They also accused her of being more culpable than Kurland.
"It was Chiesi, and not Kurland, who induced Moffat to breach his duties to IBM. And it was Chiesi, and not Kurland, who magnified the crime by simultaneously conspiring with Rajaratnam and others, who controlled billions of more dollars," they said.
The Sri Lanka-born Rajaratnam was convicted last month thanks largely to wiretaps prosecutors used to back up their claim that he made a fortune by coaxing a crew of corporate tipsters into giving him an illegal edge on blockbuster trades in technology and other stocks. The defense had argued that the tapes revealed nothing more than that Rajaratnam was doing his duty by asking questions about information already circulating in the "real world" of high finance.