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‘Octopussy’ Zvi Goffer Watches Raj Rajaratnam Insider Trial

Insider Trading Arrests
Zvi Goffer, a former Galleon Group employee, left, leaves federal court following an arraignment hearing in New York, U.S., on Thursday, Nov. 5, 2009. Photographer: Daniel Acker/Bloomberg

The gallery at the Raj Rajaratnam insider-trading trial attracts many of the same onlookers each day. None may be more interested in the outcome than a former Galleon Group LLC trader who today was sitting in the third row.

Zvi Goffer has been in attendance often during the proceeding, and for good reason: He is among five ex-traders who go on trial next month in their own insider-trading case. Four days ago, federal prosecutors in New York filed new charges against him and four co-defendants. All deny wrongdoing.

Goffer, 35, declined to comment during the lunchtime break. As he sat in court today listening to former Galleon President Richard “Rick” Schutte testify about the firm’s research operation, the courtroom monitor displayed e-mails written by Galleon analysts to one of Goffer’s own co-defendants, Craig Drimal, a former colleague.

Prosecutors have placed 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. Goffer’s lawyers dispute the characterization.

Beginning May 9, another jury is scheduled to be sitting in the same Lower Manhattan courthouse will be asked to decide who’s right, and Goffer will be sitting on the other side of the bar.

Will Rajaratnam Testify?

Now that Rajaratnam’s defense is under way, the biggest question is whether he’ll testify. In public at least, defense lawyer John Dowd isn’t saying, and the clues the attorney has provided haven’t been helpful.

On April 8, Dowd told U.S. District Judge Richard Holwell that the defense may complete its case by April 15. The defense team is still presenting Schutte, its third witness. It has another three to go, including an expert economist who will review many of the stock trades at issue. That would leave little time for Rajaratnam to testify.

Jim McCarthy, a spokesman for Rajaratnam, declined to comment today. Meanwhile, press reports have been inconsistent, with some saying early in the trial that he would testify and others saying later on that he wouldn’t.

Prosecutors have also been in the dark.

“A big variable in this case is whether or not Mr. Rajaratnam himself is going to testify,” Assistant U.S. Attorney Jonathan Streeter told the judge on April 8.

Dowd replied that he will advise the prosecutors when it is appropriate to do so.

“And I will,” he said.

Another Month?

At the trial each side has permitted the other to introduce documents even when they have a legal right to object. That civility may be breaking down.

This morning, when prosecutors objected to some documents the defense wanted to offer, saying they may not be authentic Galleon documents, Dowd fought back. He said he would get the records into evidence even if he had to summon other witnesses to prove their authenticity.

“We’ll keep this trial going to May,” Dowd said, with the jurors out of the courtroom.

Legal Skirmishes

No trial passes without courtroom skirmishes in which adversaries battle over the admission of evidence and vie for favorable legal rulings. Lately, the defense has been winning many of them.

Holwell today said the defense may ask a witness -- Geoffrey Canada, creator of the Harlem Children’s Zone, a New York City nonprofit group -- whether Rajaratnam was “generous.” Prosecutors called that an improper question for someone called to testify about Rajaratnam’s good character.

Holwell said that because prosecutors had called Rajaratnam “greedy” in their opening statement, Rajaratnam may respond with proof of his generosity. Canada will testify after Schutte.

The judge allowed the defense to offer evidence of jottings on Rajaratnam’s calendar, over a government claim that the writing was hearsay. Holwell also permitted Schutte to say that he thought a particular analyst’s report led him to conclude a stock was “a good buy,” while a prosecutor claimed the testimony wasn’t relevant.

Yesterday, Holwell allowed Rajaratnam to present testimony from two people who contradicted statements made by a key government witness. Prosecutors had argued that the testimony was inadmissible under legal rules. On April 8, the judge rejected a government request to bar much of the anticipated testimony from the expert economist.

The prosecution did score a victory when Holwell decided on Nov. 24 to admit wiretap recordings of Rajaratnam’s phone calls. Those tapes are now at the heart of the U.S. case.

The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).

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