Seven Not Guilty Pleas In Galleon Insider-Trading Case

Feb 2 2010 | 1:23pm ET

Seven defendants in the Galleon Group insider-trading case, including five with hedge fund ties, have pleaded not guilty to securities fraud and conspiracy charges.

The pleas are only the second round of not guilty pleas in the case, following those of Galleon founder Raj Rajaratnam and former New Castle Partners executive Danielle Chiesi in December. Eight others accused in the case—a total of 21 have been charged—have pleaded guilty, seven of those as part of plea deals with prosecutors.

Among this morning’s not guilty pleas in Manhattan federal court were Zvi Goffer and Craig Drimal, who both either worked for New York-based Galleon or at its offices. Three others who worked at hedge fund Incremental Capital—founded by Goffer after he left Galleon—also entered their pleas today: Goffer’s brother Emanuel, Michael Kimelman and David Plate.

Lawyers Arthur Cutillo and Jason Goldfarb also appeared by Judge Richard Sullivan today to plead not guilty.

All seven face 10 counts of conspiracy and securities fraud. Each fraud count carries a maximum sentence of 20 years in prison, and each conspiracy count five years.

Prosecutors say that Zvi Goffer ran the $20 million insider-trading ring. He allegedly gave his sources prepaid cellular phones to phone in their tips, to avoid detection, and paid them for the information.

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