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Ex-IBM Bigwig Sentenced to Six Months in Jail

Robert Moffat was sentenced Monday to six-months in prison for blabbing insider secrets to his mistress Danielle Chiesi

There's nothing like six month in the calaboose to round out one's resume.

Robert Moffat, the ex-IBM server and chip chief who supposedly had a shot at being named Big Blue's CEO someday, was sentenced Monday to six-months in prison for blabbing insider secrets to his mistress Danielle Chiesi. Chiesi, unfortunately, just happened to be at the center of what the government calls the biggest hedge fund insider trading scandal ever.

The sentence is exactly what the prosecution asked for. Moffat was hoping for probation.

He also has to pay a $50,000 fine. He pleaded guilty to securities fraud and conspiracy to commit securities fraud like a dozen of the 21 defendants in the case.

Chiesi, who maintains her innocence despite hours and hours of government wiretaps, goes on trial in January along with Galleon founder Raj Rajaratnam, the reputed kingpin behind the scandal. Profits from their illegal trades reportedly amounted to more than $50 million.

Moffat, 54, reportedly didn't make any money on the deal. He did it to impress his lover.

That reasoning didn't satisfy District Count Judge Deborah Batts, who apparently remains confounded. Bloomberg quotes her saying, "Why the defendant betrayed the only employer he has had for his entire career has not be addressed. His astounding breach of his fiduciary duty to his employer is why he is here."

Moffat confessed to telling Chiesi about IBM's disappointing server sales, AMD's pending spin-out of its factories and Lenovo's earnings. He knew about AMD's plans because it needed a chip license from IBM and he knew about Lenovo's performance because he was on their board having been instrumental in selling the Chinese IBM's PC unit.

A reportedly weeping and repentant Moffat was ordered to report to jail on June 30, 2011, after his daughter graduates from college.

Chiesi's former boss, New Castle co-founder Mark Kurland, the first of the Galleon mob to be sentenced, drew 27 months. He did make money on the illegal trades.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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