Two men facing a May 16 trial on insider trading charges as part of the Galleon Group LLC prosecution lost their bids to introduce evidence or postpone the proceeding, less than a week after the conviction of the hedge fund’s co-founder, Raj Rajaratnam.
Former trader Emanuel Goffer was denied his request for a two-week postponement because of “inflammatory” publicity surrounding the May 11 conviction of Rajaratnam in Manhattan federal court. Co-defendant Michael Kimelman was barred from introducing evidence that prosecutors offered him a plea deal on a conspiracy count in exchange for a sentence of probation.
“The court sees no reason, and Goffer has not offered one, why potential prejudice resulting from a juror’s familiarity with Rajaratnam’s trial cannot be identified and addressed during jury selection,” U.S. District Judge Richard Sullivan said in an order dated yesterday. In a separate ruling, the judge said “Kimelman’s rejection of the government’s plea deal is of little probative value” and “would likely distort the issues and distract the jury from the alleged facts underlying the crime.”
Jury selection begins next week in the case of Kimelman, Goffer and his brother Zvi Goffer, a former Galleon trader, who the U.S. said participated in one of three insider trading rings that are part of a nationwide probe of hedge funds, technology companies, banks and expert consultants. All three have pleaded not guilty.
To date, 21 people in the overlapping Galleon investigations have pleaded guilty. Of those, several were co-defendants in the Goffer case who entered plea deals as the trial date neared.
On April 26, former Galleon trader Craig Drimal pleaded guilty to conspiracy and five counts of securities fraud. On April 21, Brooklyn, New York, lawyer Jason Goldfarb pleaded guilty to similar charges.
Attorney Arthur Cutillo, formerly of Ropes & Gray LLP and Goldfarb’s former roommate, pleaded guilty in January. Brian Santarias, also of that law firm, pleaded guilty in 2009.
The three remaining defendants are charged with conspiracy and securities fraud. They are accused of trading on stock tips that came from the lawyers at Ropes & Gray and from Gautham Shankar, another former trader. The men face as long as 20 years in prison on the most serious charges.
The U.S. has placed Zvi Goffer at the center of the scheme and claimed his accomplices called him “Octopussy,” a reference to the 1983 James Bond movie, because of his many sources of information.
Michael Sommer, a lawyer for Kimelman, declined to comment. Michael Ross, a lawyer for Emanuel Goffer, didn’t return a call seeking comment.
Rajaratnam, 53, was found guilty May 11 of all 14 counts against him of conspiracy and securities fraud. The jury heard evidence that he gained $63.8 million over seven years through trading on inside information from corporate executives, bankers, consultants and the directors of public companies.
He faces between 15 1/2 and 19 1/2 years in prison at his sentencing July 29, prosecutors said.
The case is U.S. v. Zvi Goffer, 10-00056, U.S. District Court, Southern District of New York (Manhattan).