Jurors deciding the insider-trading trial of Galleon Group LLC co-founder Raj Rajaratnam failed to reach a verdict after a week of deliberations and are set to return May 2 to resume weighing evidence.
The federal court jury in Manhattan put in a half-day yesterday before leaving for the weekend. They submitted no notes to the judge and haven’t asked to review evidence since April 27.
The nine women and three men have deliberated for about 29 hours since U.S. District Judge Richard Holwell instructed them on the law on April 25. In that time, they have asked to hear about 15 wiretap recordings of Rajaratnam’s telephone calls.
“It’s not surprising it’s taking this long with a case as complicated as this,” said James DeVita, a New York-based criminal-defense lawyer who isn’t connected to the case. “These kinds of cases are difficult for lay jurors. Each one of those counts is the equivalent to a case in and of itself.”
Rajaratnam, 53, was arrested in October 2009 in 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 15 stocks, including Goldman Sachs Group Inc., Intel Corp. and Clearwire Corp.
Rajaratnam, who said he based the trades on research, is charged with five counts of conspiracy and nine counts of securities fraud. He faces as long as 20 years in prison if convicted of the most serious charges. The trial began March 8.
New York jurors deliberated into their eighth day before convicting former WorldCom Inc. Chairman Bernard Ebbers of accounting fraud in 2005. Like the Rajaratnam case, that trial featured six weeks of testimony.
It also took eight days in 2004 for jurors to render a guilty verdict on some fraud counts against Adelphia Communications Corp. founder John Rigas and his son Timothy.
A deadlocked jury in Manhattan weighed the evidence for six days in 2004 before a judge declared a mistrial in the obstruction-of-justice case against former Credit Suisse First Boston banker Frank Quattrone. Quattrone’s conviction at a second trial was reversed on appeal.
The first trial of former Cendant Corp. Chairman Walter Forbes in Connecticut ended in a mistrial in 2005 when jurors were unable to reach a unanimous verdict after 33 days of deliberations. His second trial also ended in a mistrial, after 27 days of deliberation. He was convicted at a third trial.
In 2005, jurors in Alabama deliberated for 21 days before acquitting Richard Scrushy, the former chief executive officer of HealthSouth Corp., of directing a $2.7 billion accounting fraud.
It took jurors in Brooklyn, New York, just one day to acquit former Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tannin of securities fraud charges in 2009, after a monthlong trial.
Anthony Sabino, a professor at the Tobin School of Business at St. John’s University in New York, said the outcome of the Rajaratnam case presents “infinite possibilities.”
“It’s anybody’s guess,” he said.
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).