'Lankan hedge fund accused was probed for LTTE fund raising'

'Lankan hedge fund accused was probed for LTTE fund raising'

Six persons, including two Indian Americans and the Sri Lankan-origin man, were arrested in connection with the USD 20 million hedge-fund fraud on Friday.

As part of the probe, investigators uncovered documents showing that Tamil-origin Raj Rajaratnam was among several wealthy Sri Lankans in US whose donations to a Maryland-based charity made their way to the Tamil Tigers, the Wall Street Journal said, quoting people familiar with the probe.

Rajaratnam, 52, founder of the Galleon Group, was arrested along with two Indian Americans, Anil Kumar (51) and Rajiv Goel (51), and three others in the hedge-fund scam.
He was charged with securities fraud and conspiracy to commit securities fraud. However, there appears to be no connection between the two investigations, the paper said.
Prosecutors have alleged that Rajaratnam and his co-conspirators earned USD 20 million in improper gains.

Rajaratnam's attorney Jim Walden said his client was innocent and will fight the insider-trading charges, the Journal said.

He also said that the Tamil-origin billionaire had made charitable donations "to rebuild homes" destroyed by the devastating tsunami in Sri Lanka and other Indian Ocean nations in 2004, but had no links to LTTE, it said.

Rajaratnam was probed but not charged in the terrorism investigation, led by the FBI and federal prosecutors in Brooklyn. Eight other people in the case had pleaded guilty to attempting to provide material support to the terrorist group.

However, prosecutors in the case do not allege that Rajaratnam and other donors knew their contributions to the charity called Tamil Rehabilitation Organisation, or TRO USA, were funnelled to the LTTE.

The case was brought against the head of the US branch of the LTTE, Karunakaran Kandasamy, who pleaded guilty in June to providing material support to a terror group.
In the same case, an FBI agent cited documents uncovered in searches as showing donations to TRO USA made by Rajaratnam, identified only as "individual B." The funds were then wired to TRO's Sri Lanka bank accounts, the paper said.

According to bank records cited by the FBI in that case, "Individual B" made donations to TRO USA totaling USD one million in 2000 and another USD one million in 2004, which were then wired to the organisation's Sri Lankan accounts, it said.