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The allegations against beleagured US hedge fund Galleon Group got wilder today when it emerged that victims of attacks by Sri Lanka's Tamil Tigers say the company's founder helped fund the terror group's “crimes against humanity”.
A lawsuit filed in New York by 30 people who say they survived attacks during the decades of civil war in Sri Lanka alleges that Raj Rajaratnam gave more than $5 million (£3 million) to a charity that has since been exposed as a fund-raising front for the Tamils.
Galleon is shutting its funds and returning £1.4 billion to investors as part of what it describes as an “orderly wind down”.
The fund's assets have tumbled as allegations of insider trading spread and investors took fright, pulling out money rapidly.
Rajaratnam was charged with insider trading a week ago, but insists he is innocent. Five other men have also been accused of profiting from the insider trading ring.
The latest allegations increase the pressure on a man who has seen his reputation left in tatters.
The lawsuit claims Rajaratnam gave, via a family foundation, several millions to the Tamil Rehabilitation Organisation, since said by US authorities to have terrorist links.
Michael Elsner, the attorney bringing the lawsuit, said: “The defendants, we allege, have the plaintiffs' blood on their hands because those who paid for murder are as culpable as those who committed the acts.”
Galleon was founded by the Sri Lankan billionaire in 1997.
Fresh details of the insider trading allegations are also emerging.
Information provided by hedge fund manager Roomy Khan, the informant who is co-operating with prosecutors, led to arrests in the case.
