Rajaratnam Jury Listens to 12 More Wiretapped Conversations
Rajaratnam Case Gets Quiet
Peter Foley/Bloomberg
John Dowd, lead attorney for Raj Rajaratnam, co-founder of Galleon Group LLC, enters federal court in New York on May 5, 2011.
John Dowd, lead attorney for Raj Rajaratnam, co-founder of Galleon Group LLC, enters federal court in New York on May 5, 2011. Photographer: Peter Foley/Bloomberg
Jurors didn’t reach a verdict yesterday in their 10th day of deliberations in the insider- trading trial of Raj Rajaratnam, after listening to a dozen wiretapped conversations, most of which were between Rajaratnam and Rajiv Goel, a former Intel Corp. (INTC) executive.
Jurors asked to hear six recordings of phone conversations between the two men yesterday morning, saying in a note from the jury foreman that they were intended for the benefit of the alternate juror, a 39-year-old man from Westchester, who replaced Juror 2 on May 4.
Shortly after hearing the first set of recordings, jurors were back in the courtroom listening to six more conversations, one of which was between the Galleon Group LLC co-founder and his brother, Rengan Rajaratnam. The rest were between Rajaratnam and Goel.
The conversations primarily concerned an investment by Intel in a wireless network company to be formed by Clearwire Corp. (CLWR) and Sprint Nextel Corp. (S) and the planned acquisition of PeopleSupport Inc. by Essar Group, an Indian company. Jurors will resume deliberations tomorrow.
Rajaratnam, 53, is on trial as part of the largest crackdown on hedge-fund insider trading in U.S. history. Prosecutors said he gained $63.8 million from tips leaked by corporate insiders and hedge-fund traders about stocks including Goldman Sachs Group Inc. (GS), Intel and Clearwire.
Rajaratnam’s Defense
Rajaratnam defended himself at trial claiming his trades were the result of Galleon research, not illegal tips.
During the trial, Goel testified that he passed inside information about Intel’s planned investment in the Clearwire venture to Rajaratnam, who made about $579,000 in profit from the information, according to prosecutors. Goel, a former friend of Rajaratnam, pleaded guilty and testified as a prosecution witness.
Goel also testified that Rajaratnam made trades in Goel’s investment account based on inside information about the PeopleSuppport acquisition.
On May 4, U.S. District Judge Richard Holwell replaced Juror 2, saying she was forced to withdraw from the panel for medical reasons that weren’t disclosed publicly. Holwell told the panel to restart deliberations with the new juror.
Goffer Trial
Yesterday afternoon in a different courtroom, Zvi Goffer, a former Galleon employee, had a final conference before his insider-trading trial begins in the same courthouse as Rajaratnam’s on May 16 before U.S. District Court Judge Richard Sullivan in Manhattan.
Goffer, his brother Emanuel Goffer, and Michael Kimelman, all former traders, are charged with conspiracy and securities fraud. They faces as long as 20 years in prison if convicted of the securities fraud.
Prosecutors have placed Zvi Goffer at the center of what they say is a related insider-trading scheme and claimed his accomplices called him “Octopussy,” a reference to the 1983 James Bond movie, because of his many sources of information. He traded on information and tips he got from lawyers at the law firm or Ropes & Gray LLP. They all deny wrongdoing.
Goffer, who has regularly attended Rajaratnam’s trial, was part of a second round of defendants arrested charged in 2009 by prosecutors in the office of Manhattan U.S. Attorney Preet Bharara. He was one of seven people arrested by the Federal Bureau of Investigation, part of what the U.S. said is the largest insider trading case of a hedge fund ever brought.
21 Plead Guilty
Of the 26 defendants originally charged in both cases, 21 have pleaded guilty.
Prosecutors said yesterday that Brien Santarlas, a former Ropes & Gray lawyer, will testify for the government.
Morris Fodeman, a lawyer for Kimelman, told Sullivan that while there are at least 100 wiretapped telephone calls secretly recorded by the FBI, he argued that prosecutors should play all of the calls and not just excerpts “for completeness.”
Assistant Manhattan U.S. Attorney Andrew Fish told Sullivan yesterday that prosecutors are attempting to narrow down the tapes to about 60 relevant tapes.
“I think the defense would really love us to play 30 minutes of inane chatter,” Fish said. “The defendants are trying to bury the relevant parts and have the jury fall asleep the rest of the time.”
The case is U.S. v. Rajaratnam, 09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporters on this story: David Glovin in Manhattan federal court at glovin@bloomberg.net; Patricia Hurtado in Manhattan federal court at phurtado@bloomberg.net; Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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