May 31 (Bloomberg) -- Prosecutors rested their insider-trading case against ex-Galleon Group LLC trader Zvi Goffer, his brother Emanuel, and accused accomplice Michael Kimelman as the traders offered evidence that they didn’t trade on illegal tips.
Less than two weeks after opening their case against the three men, prosecutors today told the judge and jury in Manhattan federal court that they had no more evidence to present. Five hours later, lawyers for the accused ended their cases as well. Closing arguments will begin tomorrow, and jurors may be deliberating by June 2, the judge said.
Before resting, a lawyer for Emanuel Goffer played for jurors a recording of a conversation between the Goffer brothers that was wiretapped by the government on Jan. 6, 2008. In it, the two discuss whether to hire a trader for their firm, Incremental Capital LLC, which Zvi Goffer founded with his brother and Kimelman after being fired from Galleon.
“He’s gonna be consulting with other, with companies like small cap,” Emanuel Goffer said on the recording. “I think that the rule that would be is, no one just allowed to trade the stocks that he’s consulting for.”
“Or you could, you could trade the stocks, but not ahead of an announcement,” Zvi Goffer replied.
The three defendants are accused of trading on illegal tips that came from attorneys then working at the Ropes & Gray LLP law firm. The tips were about transactions involving 3Com Corp. and other stocks, according to prosecutors.
Goffer’s ex-boss, Raj Rajaratnam, was found guilty May 11 of insider trading. He faces as long as 19 1/2 years in prison when he’s sentenced on July 29. Prosecutors previously said that Goffer passed inside information to another Galleon trader to impress the hedge fund’s managers.
The Goffer brothers’ conversation, which defense lawyers say was presented to show that two didn’t trade on illegal tips, followed testimony from an agent for the Federal Bureau of Investigation, Jan Trigg, who was recalled to the witness stand by Kimelman.
Under questioning from Michael Sommer, a lawyer for Kimelman, Trigg testified that Kimelman didn’t use a prepaid cell phone, as others in the alleged scheme had done, and that Kimelman didn’t work with Zvi Goffer in 2007.
The agent testified that the FBI never recorded Kimelman and Zvi Goffer sharing illegal information and that Zvi Goffer didn’t telephone Kimelman after he got a leak from another trader.
Sommer also sought to show that Kimelman didn’t trade in 3Com at the same time as others who are accused of insider trading or have pleaded guilty to doing so. Kimelman sold shares of 3Com on Sept. 28, 2007, about 90 minutes before the maker of computer-networking equipment announced that it would be acquired by Bain Capital LLC, Trigg testified after being shown records by the defense.
“He put in an order to sell, yes,” Trigg said as Sommer asked questions suggesting that such a stock sale would be inconsistent with insider trading.
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: David Glovin in New York at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org