Raj Rajaratnam Pleads Not Guilty to Insider Trading

New York hedge-fund billionaire Raj Rajaratnam pleaded not guilty Monday to running an insider trading scheme that allegedly racked up $21 million in profits – the biggest hedge-fund insider trading case ever brought.

Rajaratnam is charged with conspiracy and securities fraud, accused of operating an elaborate insider trading operation in tech and other stocks through his hedge fund. Galleon Group had made Rajaratnam one of the wealthiest men in America, with an estimated net worth of $1.3 billion. As ABC News reported exclusively, Rajaratnam has also provided extensive financial support to a charity linked to the Tamil Tigers terror group.

"Mr. Rajaratnam is innocent," said his lawyer, John Dowd, "and looks forward to his day in court when a jury of his fellow citizens will examine and evaluate all of the evidence."

Rajaratnam has asked that his $100 million bail be reduced to $25 million. If convicted, he faces up to 20 years in prison.

Twenty others in addition to Rajaratnam were arrested in the case, which was the first hedge-fund insider trading case to use wire taps. Prosecutors said they have more 100 hours of intercepted phone calls that show how the defendants profited from inside stock information.

According to prosecutors, in one intercepted call, defendant Danielle Chiesi said, "I'm dead if this leaks. ... I'll be like Martha f___ing Stewart." Stewart went to prison for lying to the government about the sale of shares in a friend's company. She sold the shares before the stock fell.

Rajaratnam Gave to Terror-linked Charity

Rajaratnam was also a major contributor to the campaigns of Hillary Clinton and the single largest known U.S. contributor to a charity linked to the Tamil Tigers in Sri Lanka, according to records obtained by ABCNews.com.

A Sri Lankan native, Rajaratnam gave more than $3.5 million to the Tamil Rehabilitation Organization (TRO), whose assets were frozen by the U.S. Treasury Department in Nov. 2007 because of alleged ties to the Tamil Tigers.

Last week, he filed a motion to dismiss a civil suit filed against him by alleged victims of the Tamil Tigers.

In his filing, Rajaratnam admitted giving money to the TRO, but said the group was a charity recognized by "multiple international organizations and leaders ... for its relief work." Rajaratnam's motion said that the U.N. Secretary General, former Presidents Clinton and George H.W. Bush had met with TRO officials.

Raj claimed that his donations did not have "substantial effect" on the commission of terrorist attacks and that he didn't intend for his money to be used for terrorism. He also said in the filing that U.S. courts had no jurisdiction: "This is a Sri Lanka dispute about injuries suffered in Sri Lanka by Sri Lankan citizens at the hands of Sri Lankans."

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