Sept. 7 (Bloomberg) -- Rajiv Goel “substantially aided” the insider-trading prosecution of his former Wharton classmate Raj Rajaratnam, the government said in court papers as the former Intel Corp. managing director seeks to avoid prison.
Goel, 54, testified against former Galleon Group LLC co-founder Rajaratnam last year. He was an “essential” prosecution witness at the New York trial, providing “significant and timely cooperation,” Assistant U.S. Attorney Reed Brodsky wrote.
In a separate filing, Goel’s lawyer, David Zornow, asked for probation for his client, saying his reputation was ruined as a result of his involvement in the case.
“Goel testified against one of his closest friends who had provided him with substantial financial assistance over many years,” Brodsky wrote. “Although Goel did not express it or complain about it, he had to overcome the emotional aspect of providing assistance and trial testimony that helped demonstrate his close friend was guilty of multiple counts of securities fraud.”
Goel was arrested with Rajaratnam in October 2009. He pleaded guilty in February 2010 to conspiracy and securities fraud. He faces as long as 25 years in prison when he is sentenced Sept. 12 by U.S. District Judge Barbara Jones.
Goel, who worked at Intel’s treasury group, testified he told Rajaratnam about Intel’s earnings in 2007 and a $1 billion transaction in 2008.
He told jurors that he and Rajaratnam became friends at the Wharton School of the University of Pennsylvania, from which they graduated in 1983, and grew close over ensuing years. The families vacationed together, said Goel, a native of Mumbai.
After returning to the U.S. from India and winning a job at Intel in 2000, Goel said, he repeatedly turned to Rajaratnam for financial assistance. Rajaratnam loaned Goel $100,000 to buy a home in 2005 and another $500,000 the next year when he needed support for his ailing father, Goel said.
Goel put the $500,000 in a Swiss bank and used a portion to remedy a problem in his California home. He testified he didn’t report the gift to the Internal Revenue Service.
“Goel was not even close to Rajaratnam’s criminal league,” and instead “corrupted and manipulated” by the fund manager into committing crimes, Zornow said in his memo to the court.
“This is not intended to minimize or excuse Mr. Goel’s conduct,” Zornow wrote, “but, it is important to point out that Goel has no criminal history, and, as the government has acknowledged “had lived a life free of crime until he started providing Rajaratnam with inside information.”
Zornow said Goel has already been punished significantly and has been unable to find work since he lost his job at Intel after his 2009 arrest. He has also agreed to pay the U.S. Securities and Exchange Commission more than $254,000 to settle a civil suit.
The defense lawyer noted that two other cooperating witnesses against Rajaratnam, Anil Kumar and Adam Smith, were also granted probation and not sent to prison.
The case is U.S. v. Goel, 1:10-cr-00090, Southern District of New York (Manhattan).
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