Insider-Trading Informant Had A History Of Helping Galleon

Joseph Schadler, a spokesman for the Federal Bureau of Investigation, said Khan's April 2001 guilty plea was to wire fraud, a charge that resulted in a six-month home-detention sentence, $30,000 in fines and $120,000 in restitution payments. Her sentence began in July 2002.

The case is under seal in San Jose court, and the only public document available is a charging document.

That document says that, "at the request of Galleon," Kahn "fraudulently obtained proprietary, non-public and highly confidential information from her employer Intel, including 'Backlog and Billing Reports,' and product pricing and sales data for Intel microprocessors for the first and second fiscal quarters of 1998." The complaint goes on to say that Khan--whose surname is spelled "Kahn" in the complaint but who was verified by the FBI to be the same person--faxed the information from her Santa Clara, Calif., office to Galleon's New York office. The U.S. attorney who brought the case was Robert S. Mueller III, current director of the FBI.

The "cooperating witness" in the criminal complaint against Rajaratnam--whom The Wall Street Journal has identified as Khan--has agreed to plead guilty to securities and conspiracy charges and cooperate in the case in hopes of receiving a lighter sentence, according to the criminal complaint.

News of Khan's prior conviction was reported earlier by the San Jose Mercury News.

Khan couldn't be located for comment.

According to last week's Securities and Exchange Commission complaint against Rajaratnam, the cooperating witness met Rajaratnam in or around 1996, before Galleon was founded in 1997. The witness then "worked for a time" at Galleon in the late 1990s, according to the complaint. It doesn't specify exact dates.

An SEC spokesman declined to comment. The U.S. Attorney’s office in Manhattan, which brought the criminal case against Rajaratnam, declined comment Friday. Galleon and Intel also declined to comment. A message left for an FBI spokesman about whether Mueller could comment on the case wasn't immediately returned.

Five others were charged along with Rajaratnam in the $20 million insider- trading case.

Rajaratnam has said he is innocent.

-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@ dowjones.com

(Chad Bray in New York and Ben Charny in San Francisco contributed to this article.)

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