Whether you approved of the outcome or not, the conviction and sentencing of Michael Kimelman has a significance that goes beyond the facts of the case. At least for me it does. Kimelman, if you haven’t been keeping up on these things, was convicted of conspiracy and two counts of securities fraud recently. His was one of the federal cases stemming from the Galleon Group hedge fund scandal. Last week, the head of the fund, Raj Rajaratnam, was sentenced to an eleven year prison term, which is the largest ever given in a hedge fund fraud case.
Kimelman was never considered one of the major players. Although the charges he faced could have led to a multi-decade term, he was offered a deal two years ago that would have meant no jail time at all. But he wouldn’t plead guilty and, after the verdict, the judge sentenced him to thirty months and a large fine.
For me, who doesn’t know the facts in detail, this was a disappointment. Sure, he broke the law, and will have to pay. I accept that. In fact, I disagree with those who feel that insider trading, which is the gravamen of his offense, is a victimless crime. When the market is rigged like that, some sap will lose money because he bought the shares that Kimelman needed to dump, and who wouldn’t have bought if he knew the truth.
Still, what saddens me is that Kimelman wanted to fight. He wanted to take on a system that is so overwhelmingly weighted against him that he takes on the aura of a hero, even if it is misapplied in his case. You see, he inspires sympathy because of the deal itself. I would have felt no sympathy if the feds had gone directly to trial, even if it resulted in a bigger sentence. At least that would have shown the government’s commitment to the law, and to the truth. But, at least in the prosecution of the law, the truth is a luxury the government gave up a long time ago, to its enrichment. What counts now is making the deal, like the closing of a sale. And they will stack all possible charges and permutations of charges to force the target to yield. The law allows that. Juries can now be offered a tasty buffet of charges, and it doesn’t matter if they are all derived from one stupid act…even the making a single phone call. On top of that, they can add any “misstatement” told the police during the investigation, just as if that was equal to the original crime.
Still, while I can’t say that offering the deal was morally wrong, Kimelman’s conviction was repellent. And I say that with absolute confidence that I could have found him guilty, if an objective review of the evidence demanded it, if I had served on his jury. It is absolutely necessary to find the corruption and to stop it. But the system we have today has costs that I find unacceptable, and which are usually ignored. Kimelman may not deserve my sympathy, but he was only targeted to cast him in a role in the larger drama. You can be sure that the deal he rejected required his testimony against Rajaratnam, and perhaps others. The government believes that threatening any accused person with outrageously exaggerated charges is a necessary part of its campaign against the “big fish” target, and it seems to work more often than not. When a small player like Kimelman mistakenly thinks he can beat the system, whether due to blind egotism or bad legal advice, he can get a rude awakening.
I hope that Kimelman is consoled by the fact that his decision has served the interests of the public, which has benefitted from its knowledge of the truth. Not all of it, of course, due to limits under the rules of evidence, but surely more than we would have known without the trial. I only mourn the hidden costs of this system. We seem to have accepted the fact that merely charging an American with crimes is justified under a plain cost-benefit analysis. Whether the charges are true or not seems to be irrelevant.