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Ex-Galleon Trader Craig Drimal to Plead Guilty, Court Says

Ex-Galleon Trader Craig Drimal
Craig Drimal, one of a group of defendants charged with insider trading related to the Galleon Group LLC hedge fund investigation. Photographer: Rick Maiman/Bloomberg

April 26 (Bloomberg) -- Craig Drimal, a former Galleon Group LLC employee charged with insider trading as part of federal investigation of the New York hedge fund, is scheduled to plead guilty today in Manhattan, a court clerk said.

Drimal, a trader, and several co-defendants face trial next month for allegedly taking part in what U.S. prosecutors said is one of three insider-trading rings tied to Galleon. The fund’s co-founder, Raj Rajaratnam, is on trial for insider trading in Manhattan federal court. The jury began deliberations yesterday.

Drimal would be the 21st person to have pleaded guilty in the overlapping schemes. The probe of Galleon expanded into a nationwide investigation that has implicated other hedge funds, banks, technology companies and so-called expert-networking consulting firms.

Janeanne Murray, a lawyer for Drimal, didn’t immediately respond to a call seeking comment. At a hearing last week before U.S. District Judge Richard Sullivan in Manhattan, Murray asked for a two-month delay in the case, citing a new indictment. Sullivan granted a week delay, setting the trial for May 16.

Last week, one of Drimal’s co-defendants, a Brooklyn, New York, lawyer, admitted to taking part in the same alleged insider trading scheme. Jason Goldfarb pleaded guilty April 21 to conspiracy and securities fraud before Sullivan.

1,000 Wiretaps

Drimal lost a bid on April 20 to suppress all of the secretly recorded wiretapped conversations made by agents with the U.S. Federal Bureau of Investigation.

While Sullivan ruled that agents had improperly failed to reduce several recorded discussions Drimal had with his wife, including a call where the couple “had a deeply personal and intimate discussion about their marriage,” he said he would allow the U.S. to use the tapes at trial.

“The fact that several of the more than 1,000 intercepted calls were not properly minimized does not automatically entitle Drimal to blanket suppression of the wiretap,” Sullivan wrote in an April 20 ruling.

Drimal, who the U.S. said worked as a trader at Galleon’s office space in Manhattan, was accused in a new indictment filed April 7 of conspiring to commit securities fraud with co-defendants and five counts of securities fraud.

The U.S. said Drimal and his co-defendants, including ex-Galleon trader Zvi Goffer, paid tens of thousands of dollars to Arthur Cutillo and Brien Santarlas, lawyers at Boston-based Ropes & Gray LLP, for information about transactions their firm was working on.

Not Guilty

Goffer and three other traders accused in the scheme -- his brother Emanuel Goffer, Michael Kimelman and Drimal -- pleaded not guilty to new federal charges against them at a hearing before Sullivan on April 19.

Goffer’s trades on the tips resulted in profits of about $1 million, and he gave Goldfarb $97,500 for the information, to be distributed among the three men, Assistant U.S. Attorney Andrew Fish has said.

The case is U.S. v. Goffer, 10-cr-00056, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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