Raj Rajaratnam was convicted of insider trading by a jury that never argued during 12 days of secret deliberations that he was innocent, a juror said.
By the second day of their discussions in federal court in Manhattan, the panel decided the Galleon Group LLC co-founder was guilty of the first conspiracy charge in a 14-count indictment, concluding he traded on illegal tips from former McKinsey & Co. partner Anil Kumar, juror Leila Gonzalez Gorman said in an interview at her home.
It took 10 more days of what Gorman said were tense and sometimes tearful talks, punctuated by the replacement of an ailing juror that forced them to restart deliberations, before a May 11 verdict that Rajaratnam was guilty of five conspiracy and nine securities-fraud charges. Jurors never believed the hedge fund manager’s arguments that his trades were based on a “mosaic” of publicly available information, she said.
“No one was arguing that he was not guilty,” said Gorman, 44, who teaches second-graders in the Bronx. “Some people said ‘I’m not sure about this’ and ‘I’m not sure about that.’ But no one said he’s an innocent man at any point.”
Rajaratnam, 53, faces 15 1/2 years to 19 1/2 years in prison under federal sentencing guidelines. Jurors found he made $63.8 million in illicit profits during a seven-year conspiracy to trade on inside information from corporate executives, traders and directors of public companies.
Lawyers for Rajaratnam, who is free on bail, said he plans to appeal his conviction in the biggest insider trading trial in a generation. Prosecutors for U.S. Attorney Preet Bharara in Manhattan have charged 47 people with insider-trading over 18 months as part of a nationwide investigation.
Heard His Voice
Rajaratnam didn’t testify, although jurors heard his voice in more than 40 wiretapped conversations with Kumar; Rajiv Goel, a managing director at Intel Corp. (INTC); and Danielle Chiesi, an analyst at New Castle Funds LLC. All pleaded guilty, and Kumar and Goel testified against Rajaratnam, as did Adam Smith, a former Galleon trader.
“The wiretaps helped but they were not the most compelling” evidence, Gorman said. “They were very, very helpful because you get to listen to the tone. It pieced everything together. It was a confirmation that this is definitely insider trading.”
Just as important, she said, was the testimony of the conspirators and the government’s expert, as well as e-mails, instant messages, text-messages and government graphs showing the share prices of stocks and the dates of Galleon’s trading. She discounted the testimony of Rajaratnam’s witnesses.
‘Pieced Everything Together’
“There were numerous things that pieced everything together,” said Gorman. “As we were going through the counts and had enough evidence to support the fact that he conspired -- one of the jurors said ‘If it walks like a duck and quacks like a duck, it’s a duck.’ But no one was that rude and that raw to say, ‘well he’s a crook.’”
The panel of eight women and four men included a parks department worker; an activities therapist at a nursing home; a food service worker; a nurse; an assistant kindergarten teacher; an educator of blind and visually impaired children; and a customer service representative for New York’s transportation agency. The foreman, Robert Jirmnson, a 3-D graphic designer who said he works for Apple Inc. (AAPL), declined to comment.
“Everyone in that room was brand new to the stock market and how traders trade and all the fancy terms,” said Gorman, a resident of Port Chester, New York.
After two months of testimony, the panel began on April 25 to weigh the evidence in a jury room with a long wooden table, a window, a refrigerator, a microwave, a toaster and two large bathrooms. They sat five to a side, with two on one end.
‘We Were Scared’
“Before we did anything, we didn’t say a word for what felt like a half hour,” she said. “We were scared, nervous. Some put their head down, some looked out the window. We said where do we start?”
After picking Jirmnson as foreman, the panel asked U.S. District Judge Richard Holwell for transcripts of the taped calls. The judge sent word back that they would have to listen to the tapes in open court.
The panel began organizing itself, with one juror making large flip charts and another searching for documents among hundreds of pieces of evidence sent to the jury room. After finishing the first count, the panel methodically proceeded to the next count, pulling out the relevant documents and laying them on the table, Gorman said.
Rajaratnam was a “brilliant” and “mild-mannered man with an intellectual sense of humor,” said Gorman, a divorced mother with a 28-year-old son and 21-year-old daughter.
“At the same time, he was very stupid,” she added. “That was the sad part. He traded for less money than he already had. If you’re going to steal, steal big.”
He was a “chameleon” who “could adapt to whatever personality to get whatever he wanted,” Gorman said.
“Raj knew how to pick his victims,” she said. “He knew who was weak and who was crooked. It’s better to have weak and crooked people feeding you information. If you can have a little snitch who can kiss your butt, why not?’”
While three jurors initially talked about the mosaic theory defense, none cited it after they finished the first few counts, which involved tips from Goel, she said. By the sixth day, the panel was nearly done with the fifth conspiracy count when a juror became ill. She didn’t return on the next day, May 3. Holwell replaced her on May 4, with an alternate, Wilson Thomas, a 39-year-old parks department foreman.
Holwell ordered the group to start anew.
“I thought, ‘Oh God,’” said Gorman. “I wanted to have my life back. We were caught in this whole web. I wasn’t sleeping at night, and I was bored. I couldn’t listen to the radio. I was pretty stressed out.”
Jurors tore up their initial hand-written chart and began to work more efficiently than before, Gorman said. They didn’t signal their earlier viewpoints to Thomas, Gorman said. Jurors began snapping at each other under the pressure, she said.
“There was more tension, more sensitivity, there was crying at times,” she said. “It was very intense. They were worried about making a mistake and sending someone to jail for a long time. This is a human being. None of us had been in a situation like that where we had to decide someone’s fate.”
Still, the panel worked well together, though sometimes squabbling over bathroom breaks, she said.
“The best part is when we got upset with each other, we didn’t hold it in,” Gorman said, adding that members joked among themselves. “I remember one of them said ‘I’m going to whip your butt.’ I said, ‘Really?’”
By late afternoon on May 10, the panel had worked its way through the first 13 counts, Gorman said. They were waiting for Thomas to decide on the final count. After ending for the day, Gorman and some other jurors laughed and snapped photos together near the courthouse in lower Manhattan.
The next morning, they reviewed the final count and voted.
“Everybody raised their hand for Count 14,” she said. “Wilson said we should say a prayer for Raj’s family and everyone’s family. Wilson said it out loud.”
The deliberations took its toll on the panel.
“This has been an exhausting event,” Carmen Gomez, a 55- year-old teacher in the Bronx, said in an e-mail. She declined to comment further on the deliberations, saying only that the “evidence speaks for itself.”
Another juror, Freddy Vazquez, said: “The evidence was there.” He declined further comment, saying: “I just want to get on with my life.” Other jurors on the panel either declined to comment or didn’t respond to requests for interviews.
‘Lot of Tears’
“At the end, there were a lot of tears,” Gorman said. “Everyone was crying. They felt bad for this guy. It was sad. Even I shed a few tears. You feel bad for the families.”
Gorman said the trial cast a harsh light on Wall Street, which she said is full of gamblers who need regulation.
“The whole plot seemed like an infiltration of Wall Street,” she said. “They were like a bunch of parasites and they were just sucking Wall Street. They were all in it together. It was a big web.”
She was impressed with the prosecutors, including Assistant U.S. Attorney Reed Brodsky, whom the panel nicknamed “Napoleon.”
“He had a big spirit,” she said. “When he got up there, he was full of life. He had a lot to say. They weren’t trying to hide anything. He was clear, he was precise, he was convincing.”
Rajaratnam attorney John Dowd and other members of the defense team did their best, she said.
“All these guys worked really hard to defend him,” she said. “They tried to come up with enough evidence to prove he was innocent. I’m not saying he didn’t do a good job, but sometimes the truth overrides the lie. The truth always prevails. The government absolutely had the truth.”
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court for the Southern District of New York (Manhattan).
To contact the reporters on this story: David Voreacos in Newark, New Jersey, at firstname.lastname@example.org; David McLaughlin in New York at email@example.com; Bob Van Voris in Manhattan federal court at firstname.lastname@example.org