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Bail Hearing For Hedge Fund Founder Raj Rajaratnam

Billionaire Galleon Group hedge fund cofounder Raj Rajaratnam departs Manhattan Federal Court - New York, NY - Mar 8, 2011 - Photo: Mario Tama/Getty Images

Galleon Group hedge fund cofounder Raj Rajaratnam (credit: Mario Tama/Getty Images)

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NEW YORK (CBSNewYork/AP) — A federal appeals court has not immediately ruled after hearing arguments over whether a wealthy former hedge fund boss sentenced to 11 years in prison should remain free on bail pending appeal.

The three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan did not indicate at Wednesday’s hearing which way it was leaning in the question over Raj Rajaratnam’s freedom.

The 54-year-old Galleon Group founder described by the government as “the modern face of illegal insider trading” was sentenced in October to 11 years in prison, the longest insider trading sentence ever but far short of the two decades sought by prosecutors.

He is scheduled to report to prison on Monday.

The sentencing culminates a series of convictions and sentencings that followed the October 2009 announcement of Rajaratnam’s arrest. More than two dozen people were arrested; all were convicted. The other defendants got sentences ranging from a few months to 10 years.

The probe relied heavily on the most extensive use of wiretaps ever for a white-collar case, capturing conversations in which Rajaratnam and his co-conspirators could be heard gleefully celebrating their inside information.

Assistant U.S. Attorney Reed Brodsky told U.S. District Judge Richard J. Holwell  before the sentence was announced that Rajaratnam made up to $75 million in illegal profits from insider trading he indulged in since at least the late 1990s as he led one of the world’s largest hedge funds. The government has said he switched so much money around within his multibillion dollar funds that the movement of price in individual stocks could be traced to his trading whims.

Rajaratnam lawyer Patricia Millett argued that there was a substantial question of law on appeal that entitles him to bail because he’s not a flight risk. A prosecutor argued that there was no substantial question of law and said he should go to prison

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(TM and Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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