Aug. 8 (Bloomberg) -- A key informant in the insider-trading case against Whitman Capital LLC founder Doug Whitman told jurors that she lied to federal agents, destroyed evidence and tried to warn some of her contacts that she had been questioned about illegal trades.
Roomy Khan, who said she gave inside information to Whitman about Google Inc. and Polycom Inc., told jurors under questioning by a defense lawyer today that she lied to Federal Bureau of Investigation agents questioning her in 2007 in a probe of insider trading.
Khan, who had pleaded guilty to wire fraud in 2001 for passing confidential Intel Corp. revenue figures to Galleon Group LLC fund manager Raj Rajaratnam, testified in federal court in Manhattan that she used a cell phone the government didn’t know about to tell some of her contacts that she’d been questioned by the Securities and Exchange Commission, not the FBI.
“I think I had been lying to the government about a lot of things and I was just scared to use my own phone,” Khan said.
David Anderson, a lawyer for Whitman, said in his opening statement in the trial that his client made money from trading on legitimate information about technology companies. Anderson urged jurors not to believe Khan and two other government witnesses, who he called “criminals and liars” testifying against Whitman in hopes of avoiding prison.
Khan, who pleaded guilty to a second set of insider trading charges in 2009, faces as long as 30 years in prison when she’s sentenced. She testified for a third day in the trial of Whitman, her former Atherton, California, neighbor.
Prosecutors accuse Whitman of trading on information from sources including Khan, who passed him illegal tips on Google Inc. and Polycom Inc. Those tips and others earned almost $1 million for Whitman’s fund, they said.
Khan testified that she got information about Polycom, the Pleasanton, California-based maker of videoconferencing equipment, from Sunil Bhalla, a friend and senior vice president and general manager of the company’s voice division. Khan said she passed inside information to contacts including Whitman and Rajaratnam and traded on some of them herself.
Khan said she initially lied to investigators about her 2007 trading in Hilton Hotels Corp., claiming it wasn’t motivated by an illegal tip about Blackstone Group LP’s planned takeover. She had said she made the trades after learning that Paris Hilton had been sentenced to jail, which she thought would bring the hotel company publicity that would raise its share price.
The case is U.S. v. Whitman, 12-cr-00125, U.S. District Court, Southern District of New York (Manhattan).
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