Raj Rajaratnam's Alleged Insider Trading Scheme May Have Been Twice as Big as Thought -- $36 Million College friend Anil Kumar pleads guilty to conspiracy and securities fraud.

Jan. 7, 2010  -- A McKinsey & Company director accused of leaking information in the largest hedge fund insider trading case ever pleaded guilty today to conspiracy and securities fraud.

Anil Kamar pleaded guilty to "conspiring to commit inside trader crimes with Raj Rajaratnam," said the U.S. Justice Department.

Kumar is thought to be cooperating with federal prosecutors about his role in feeding information to hedge fund billionaire Raj Rajaratnam, who is accused of running a $20 million insider trading scheme.

Kumar's agreement to waive indictment was a sign he was helping the feds, who may soon reveal that the alleged size of the scheme was far larger than originally reported.

Rajaratnam, founder of the Galleon Group hedge fund, has already pleaded not guilty to charges of security fraud in connection with allegations that inside information helped him to build Galleon into a multi-billion dollar enterprise. At its height, Galleon held $7 billion in assets.

Prosecutors had accused Kumar of providing inside information about Advanced Micro Devices Inc., a company he advised, to Rajaratnam. Kumar and Rajaratnam had been friends since attending the M.B.A. program Wharton School at the University of Pennsylvania.

But on Tuesday, the U.S. Attorney's office filed a brief opposing Rajaratnam's motion to cut his $100 million bail to $20 million, in which it noted that a superseding indictment including more charges was expected to be filed against Rajaratnam.

The expanded insider trading charges will include the allegation that he earned more than $36 million in illicit profits – double the amount earlier alleged, according to court papers.

The government brief stated those charges would include insider trading between March and July 2006 over an acquisition of ATI Technologies Inc by Advanced Micro Devices Inc. It said the information came from an unidentified source "to whom Rajaratnam began making large payments in exchange for inside information in or about 2004."

Rajaratnam's lawyer, John Dowd, said in a statement to Reuters: "An analyst's prediction that AMD would acquire ATI was widely reported in the press more than seven weeks before the acquisition was announced." A bail hearing is set for Friday.

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.

CLICK HERE TO READ THE INDICTMENT FILED AGAINST RAJARATNAM

As ABC News reported exclusively, Rajaratnam has also provided extensive financial support to a charity linked to the Tamil Tigers terror group.

Dowd told ABC News that his client "is innocent and looks forward to his day in court when a jury of his fellow citizens will examine and evaluate all of the evidence."

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.

According to documents filed with the IRS, Rajaratnam's contributions to the TRO were made in 2005 and 2006 through a separate charity, which he founded in the wake of the tsunami which hit Sri Lanka in Dec. 2004.

Despite its stated relief efforts, the Treasury Department described the TRO charity as "a front" for Tamil Tigers fundraising and procurement in the U.S.

"TRO passed off its operation as charitable, when in fact it was raising money for designated terrorist group responsible for heinous acts of terrorism," said Adam Szubin, director of the Treasury's Office of Foreign Assets Control at the time.

The Tamil Tigers waged a bloody insurgency against the government of Sri Lanka in which both sides were accused of civilian atrocities. Under the Clinton administration, the State Department designated the Tamil Tigers as a terrorist organization in 1997.

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