Terror Victims Sue Hedge-Fund Founder

WASHINGTON -- A group of victims of terror attacks by Sri Lanka's Tamil Tigers rebels filed suit against Raj Rajaratnam, the Galleon Group hedge-fund founder charged in an insider-trading case, accusing him of funding the Tigers'"crimes against humanity."The suit was filed Thursday in U.S. District Court in New Jersey by 30 people who say they are survivors of attacks carried out by the Liberation Tigers of Tamil Eelam during decades of civil war against the Sri Lankan government.

The lawsuit alleges that from 2000 to 2007, Mr. Rajaratnam and a family foundation led by Mr. Rajaratnam's father gave more than $5 million to a U.S. charity, called the Tamil Rehabilitation Organization, that the U.S. government subsequently declared in 2007 to be a fund-raising front for the Tamil Tigers.

Mr. Rajaratnam, 52 years old, was among six people arrested Friday in the insider-trading case.

Federal prosecutors charged Mr. Rajaratnam with securities fraud and conspiracy to commit securities fraud.

James Walden, an attorney for Mr. Rajaratnam, has said his client is innocent of the insider-trading charges and will fight them. Of the lawsuit filed Thursday, Mr. Walden said: "The accusation that Mr. Rajaratnam supported the LTTE is flatly untrue and libelous, and we are confident that the court will dismiss these baseless charges. Mr. Rajaratnam has the greatest sympathy for all victims of violence in Sri Lanka and has a long history of helping Sri Lankans of all ethnic groups through substantial charitable donations over many years."

U.S. prosecutors investigating the Tamil Tigers fund-raising network looked into donations Mr. Rajaratnam and other wealthy members of the Tamil community in the U.S. gave to the now-defunct TRO USA charity.

The U.S. government brought criminal charges against eight people accused of raising money to help the Tigers buy weapons and help efforts to remove the group from the U.S. terrorism-sanctions list. Mr. Rajaratnam wasn't among the eight, and the U.S. didn't allege he had any knowledge that the funds he provided the TRO were routed to the Tigers.

In court documents related to the terrorism case, a Federal Bureau of Investigations agent cites documents uncovered in court-authorized searches as showing donations to TRO USA made by a person identified only as "individual B."

Mr. Rajaratnam wasn't named in the filings but is the person identified as "individual B," according to people familiar with the probe.

The lawsuit alleges that Mr. Rajaratnam gave $1 million to the TRO USA charity in 2004. An FBI affidavit filed in one of the Tamil Tigers fund-raising cases, in Brooklyn, N.Y., also cited the $1 million 2004 contribution by "individual B" and another in 2000.

Michael Elsner, attorney for those bringing the lawsuit, said in a statement: "The defendants, we allege, have the plaintiffs' blood on their hands because those who paid for murder are just as culpable as those who committed the acts."