Galleon Group LLC trader Zvi Goffer, accused of leading one of three insider-trading rings that are the subject of a U.S. probe, pleaded not guilty to new federal charges in an amended indictment.
Goffer and his brother Emanuel Goffer, along with Craig Drimal and Michael Kimelman, today entered not guilty pleas to the new indictment filed by the U.S. on April 7.
U.S. District Judge Richard Sullivan in New York granted defense lawyers’ request for a one-week delay in the trial, which was originally set to begin May 9. The attorneys said they needed time to review evidence because of the new charges.
“I’m not persuaded that a lengthy adjournment is appropriate,” Sullivan told the lawyers, some whom asked for a two-month delay. “It seems an awful lot of what happens in trial preparation happens in the month before trial.”
Prosecutors filed a superseding indictment against five defendants. All the defendants were traders, except for Jason Goldfarb, who is a lawyer. Sullivan said Goldfarb wasn’t in court today because of a religious observance.
The indictment added new charges of securities fraud against Zvi Goffer, who now faces two counts of conspiracy and 12 counts of securities fraud. It also removed as defendants David Plate, a former trader at Schottenfeld Group LLC, and Arthur Cutillo, who was a lawyer at the firm Ropes & Gray LLP. Plate pleaded guilty in July while Cutillo pleaded guilty Jan. 14.
Sullivan today rejected a bid by defense lawyers to dismiss the new indictment.
“I don’t think that the superseding indictment, no matter how much people don’t like it, there’s virtually no authorization to do that,” the judge said.
Prosecutors said the Goffer ring traded on stock tips originating from lawyers at Ropes & Gray in New York and from Gautham Shankar, an ex-trader at New York-based Schottenfeld.
Zvi Goffer, the founder of Incremental Capital LLC, was part of the second wave of cases made by the FBI and Manhattan U.S. Attorney Preet Bharara in 2009 after Galleon co-founder Raj Rajaratnam’s arrest on insider-trading charges. The U.S. placed Zvi Goffer at the center of the scheme and claimed his accomplices called him “Octopussy,” a reference to the 1983 James Bond movie, because of his many sources of information.
Zvi Goffer’s lawyers dispute the characterization.
Zvi Goffer has frequently attended the Manhattan Federal Court trial of Galleon’s Rajaratnam. Closing arguments are scheduled to begin in that case tomorrow. Rajaratnam has pleaded not guilty, claiming his stock purchases were the result of legitimate research.
The case is U.S. v. Goffer, 10-cr-00056, U.S. District Court, Southern District of New York (Manhattan).
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