Not gonna do well in prison

Ben Protess, Jessica McHugh, and Mac William Bishop have an article in the DealBook section of The New York Times about Danielle Chiesi:

A former beauty queen turned hedge fund trader, Danielle Chiesi (photo) got a thrill from pumping insiders for information and snaring secret tidbits about companies. “It’s a conquest,” she said in a call recorded by the government. “It’s mentally fabulous for me.” But her passion has landed her in prison.
A federal judge in Manhattan sentenced Chiesi to thirty months in prison for trafficking inside information through a web of corporate players and Wall Street traders.
“For Danielle Chiesi, cultivating corporate insiders to gain an illegal trading edge was the ultimate elixir,” Preet Bharara, the United States attorney for Manhattan, said in a statement. “She was the vital artery through which inside information flowed between captains of industry and billionaire hedge fund managers, and she reveled in the conquest.”
The hearing was the latest chapter in the government’s sweeping crackdown on insider trading. Since 2009, some 49 have been charged as part of the investigation, and 46 have been convicted.
A major line of the inquiry has centered on Raj Rajaratnam, the co-founder of the Galleon Group hedge fund, who was convicted in May.
While Chiesi did not testify against Rajaratnam, her recorded voice became a regular feature at his trial. Their conversations, along with the testimony of Adam Smith, a former Galleon employee, proved crucial. Rajaratnam is to be sentenced on 27 September and faces up to 25 years in prison.
In January, Chiesi pleaded guilty to three counts of participating in the conspiracy. She acknowledged leaking information about IBM, Advanced Micro Devices, and Sun Microsystems. Her activities, prosecutors have said, earned her hedge fund $1.7 million. Prosecutors sought a sentence of up to 46 months. Chiesi’s lawyers had asked for leniency, blaming her actions on a tormented love affair with her former boss. Standing before Judge Richard J. Holwell in a Lower Manhattan courtroom, Chiesi apologized as she choked back tears. “I know that there is a punishment for breaking the law, but it won’t happen again,” said Chiesi, who wore a pink dress and matching pumps with her platinum-blond hair pulled back.
But Judge Holwell was unmoved. Along with the thirty-month prison term, Chiesi was sentenced to two years of supervised release, 250 hours of community service, a $25,000 fine and mandatory mental health and alcohol treatment. She had previously agreed to pay the Securities and Exchange Commission over half a million dollars.
“The message to Wall Street needs to be clear: if you trade on inside information, you will be caught,” Judge Holwell said. The judge said the community service, in particular, would help “adjust her moral compass, which obviously fell by the wayside.” He did acknowledge that Chiesi, who had earlier told the judge that she was receiving psychiatric care, suffered from a borderline personality disorder.
Her lawyer, Alan R. Kaufman, said: “This is not a pleasant day by any means, but it is at least over.”
After the hearing, a smiling Chiesi approached federal prosecutors and agents for the Federal Bureau of Investigation. She told them that “if you’re ever going to knock on my door then do it in the afternoon,” in a nod to her early-morning arrest in October of 2009. Prosecutors wished her “good luck” as Chiesi left the courtroom with her mother, sister, and two nieces, who greeted her with an embrace.
The sentence brings her curious criminal case to a close. A Binghamton, New York native, Chiesi began her Wall Street career in the late 1980s. She later landed at New Castle Funds, a hedge fund that was spun off from Bear Stearns. Chiesi, 45, became known on Wall Street for her colorful personality and robust Rolodex. Her specialty was the technology world, in which she built a network of sources whom she prodded for corporate secrets. Her tipsters included Robert W. Moffat Jr., a former senior executive at IBM, who has since pleaded guilty to participating in the scheme. After gathering a few nuggets, Chiesi would pass the information to Rajaratnam, among other traders. In July of 2008, a source informed Chiesi that Akamai, an internet company, was going to report less-than-stellar results. “I just got a call from my guy,” she later told Mr. Rajaratnam. “I played him like a finely tuned piano.” Unbeknownst to the pair, the government was listening. Such secretly recorded tapes ultimately became the linchpin in the government’s case. They also provided a window into Chiesi’s flirtatious style.
She alternately referred to Rajaratnam as “baby” and “honey”. She also struck up romances with Moffat of IBM and Mark Kurland, her boss at New Castle.
Her affair with the married Kurland lasted for nearly twenty years and spanned multiple jobs. A 22-year-old Chiesi met Kurland, then forty, in 1988 while working at a brokerage firm. Kurland later started New Castle, and hired his lover to join the team. Both eventually joined the insider-trading ring. Kurland has already pleaded guilty to insider trading, and was sentenced to 27 months in prison.
Chiesi’s lawyers blamed the affair, and Kurland, for involving her in the illicit plot. Her “emotional and financial well-being were inextricably linked with Kurland,” her lawyer, Kaufman, said in a recent court filing. Her counsel continued to emphasize the connection at the sentencing. “We continue to believe that Dani’s sentence should not have been any longer than the sentence received by her boss at New Castle,” Kaufman said in a statement. “But we respect the judge’s thoughtfulness and thoroughness.”
While Chiesi initially fought the charges, ultimately the government’s secret recordings were insurmountable. Some of the recorded conversations even proved prophetic: “You put me in jail if you talk,” she said in an August of 2008 call with an associate. “I’m dead if this leaks. I really am, and my career is over.”

Rico says anyone with as nice a rack as Chiesi has (and imagine what she looked like at 22) should have figured out a way to stay out of prison. But this seems to be a case of sleeping your way to the bottom...