Friday, 1 July 2016
Last updated 6 min ago
Feb 17 2010 | 2:08am ET
Federal prosecutors are pushing for an early summer trial for Galleon Group founder Raj Rajaratnam, arguing that it would be “unfair” if the Securities and Exchange Commission’s civil trial against him were to precede the criminal trial.
The U.S. Attorney’s Office in Manhattan urged U.S. District Judge Richard Holwell to schedule the insider-trading trial of Rajaratnam and co-defendant Danielle Chiesi for June or July. Another federal judge has set an Aug. 2 start date for the civil trial.
“There are numerous compelling reasons why this criminal trial should proceed before the parallel civil trial,” Assistant U.S. Attorney Jonathan Streeter wrote in a court filing yesterday. A conference on the criminal trial is set for today.
Prosecutors told Holwell that Rajaratnam and Chiesi are delaying the criminal case to win an “unfair strategic advantage” by having the SEC trial first. In his letter, Streeter argues that holding the civil trial before the criminal trial will give the defense a dry-run against the government’s witnesses, allowing them to question them in advance of the criminal trial. Streeter also alleges that the defense hopes to keep the wiretaps at the heart of the criminal case out of the SEC’s hands.
While U.S. District Judge Jed Rakoff, who is overseeing the civil case, has ordered Rajaratnam and Chiesi to turn the wiretaps over to the SEC, a federal appeals court has stayed that decision.
Finally, prosecutors argue that Rajaratnam and Chiesi would try to use their “hoped-for victory” in the SEC case to block the criminal trial from going forward, and warned that, if the civil trial occurs first, Rakoff, and not Holwell, will be able to make key rulings on evidence.
“The criminal trial, at which all the cooperating witnesses will be available to testify, and at which all admissible evidence will be presented, should proceed first,” Streeter wrote.
Alan Kaufman, who represents Chiesi, a former executive at hedge fund New Castle Partners, rejected the government’s allegations, noting that it is Rakoff, and not the defense, that is pushing for an early civil trial. He also accused the prosecution of seeking an unfair advantage of its own.
“The notion that you can have an SEC trial in August, and try to shoehorn a criminal case in before that, is terribly unfair,” he told Bloomberg News.
Much remains unsettled about the criminal trial. Last week, Rajaratnam’s lawyer, John Dowd, told Holwell that he will challenge the admissibility of the wiretaps and seek to split his client’s trial from Chiesi’s. Dowd also said his team needed another three months to sift through the 15,000 wiretap intercepts in the case.
Rajaratnam faces up to 185 years in prison if convicted, and Chiesi 155 years.
Twenty-one people have been charged in the case, the largest insider-trading case in U.S. history. Nine have pleaded guilty, eight of which are cooperating in the investigation.