Nov. 28 (Bloomberg) -- Former Goldman Sachs Group Inc. director Rajat Gupta was granted a rare hearing before a federal appeals court in New York next month for his challenge to an order that he begin his prison sentence in January.
Gupta, 63, has asked to remain free while he appeals his insider-trading conviction and delay his Jan. 8 surrender to federal prison. The U.S. Court of Appeals in Manhattan said yesterday that he has been granted a hearing on Dec. 4.
U.S. District Judge Jed Rakoff in Manhattan last month sentenced Gupta to two years in prison, rejecting his request to remain free pending appeal. Prosecutors objected after Gupta asked the appeals court to postpone his surrender date.
Gupta, who is free on $10 million bond, argued that he is likely to win a reversal of his conviction.
“The prosecution’s theory in this case was that after a ‘lifetime of good deeds and philanthropy’ and while ‘at the pinnacle of his profession’ Gupta decided to throw everything away and--for no tangible benefit--tip hedge fund manager Raj Rajaratnam,” his lawyers Seth Waxman and Gary Naftalis said in court papers.
At the trial, Rakoff wrongly allowed prosecutors to use three recordings of telephone calls of Galleon Group LLC co-founder Rajaratnam talking about his sources, calls in which Gupta wasn’t a participant, the defense lawyers said.
Gupta also argues his defense team was hampered by Rakoff’s refusal to allow him to present evidence that Rajaratnam employed other tipsters at Goldman Sachs.
“The district court’s serious evidentiary errors decisively tipped the scales in this case, and Gupta’s appeal will likely result in reversal or a new trial,” the lawyers wrote.
Prosecutors Reed Brodsky and Richard Tarlowe countered in court papers that Rakoff “correctly determined that Gupta had not identified a substantial issue of law or fact that would likely result in reversal of his conviction or a new trial.”
Gupta, 63, was convicted by a jury in June of one count of conspiracy and three counts of securities fraud. He was accused of passing illegal information about New York-based Goldman Sachs to Rajaratnam, his friend and business partner.
Rajaratnam is serving 11 years in prison for insider trading at the Federal Medical Center Devens in Ayers, Massachusetts. When he was sentenced in Oct. 2011, he wasn’t granted a hearing on his request to remain free pending appeal.
Rakoff said at Gupta’s sentencing that he would recommend to the Federal Bureau of Prisons that the term be served at the federal prison in Otisville, New York.
The case is U.S. v. Gupta, 12-4448, U.S. Court of Appeals for the Second Circuit (Manhattan).
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