Saturday, 28 November 2015
Last updated 23 hours ago
May 10 2010 | 1:13pm ET
Lawyers for Raj Rajaratnam want more than 2,000 wiretaps suppressed in his insider-trading trial, arguing that the government misled a court in obtaining permission to tap the Galleon Group founder’s cell phone.
John Dowd, Rajaratnam’s lead attorney, told U.S. District Judge Richard Holwell that prosecutors failed to tell another judge that Roomy Khan—a former Galleon employee and key witness in the case—had been convicted of insider-trading in 2002 and had repeatedly lied to investigators about Rajaratnam. The government also said the phone calls would include insider tips, but did not, Dowd wrote.
“In its zeal to break new ground and in an effort to salvage its nine-year pursuit of Mr. Rajaratnam, the government violated its obligation of candor and forthrightness to the court,” Dowd wrote. “The government obtained the court’s authorization to use wiretaps based on the sworn affidavit of an FBI agent the was rife with ‘deliberately or recklessly’ false statements.”
If prosecutors had told the truth about Khan, Dowd averred, the judge would have never granted its request for the wiretaps. What’s more, Dowd wrote, the judge shouldn’t have authorized the taps anyway, as insider-trading “is not an offense for which Congress has authorized” their use.
Dowd asked Holwell to throw some 2,400 wiretaps—containing conversations between Rajaratnam and 130 people in 2008—of the roughly 18,000 at the center of their case. Rajaratnam’s co-defendant, former New Castle Partners executive Danielle Chiesi, is also asking Holwell to junk the wiretaps, although her request was filed under seal.
If Holwell sides with Rajaratnam on the wiretap issue, Dowd said he might seek to exclude several of the prosecutions’ key witnesses who were caught on the tapes. At least four of the 11 people who have pleaded guilty in the case have agreed to testify against Rajaratnam.
Prosecutors have until May 28 to respond to Rajaratnam’s and Chiesi’s motions, with a hearing scheduled for June 17.
In his filing, Dowd said that the government turned to the wiretaps after failing to find enough incriminating evidence against Rajaratnam over a nine-year period that included a seven-hour deposition by the Securities and Exchange Commission three years ago.
“Government investigators had spent literally months in Galleon’s offices examining records,” Dowd wrote.
“At the same time as the Galleon examination” in 2007, “the SEC was also conducting a formal enforcement investigation of Sedna Capital Management, a hedge fund run by Mr. Rajaratnam’s brother, Rengan,” Dowd added. “Although Sedna had no affiliation with Galleon, it was clear by mid-2007 that the SEC was using the Sedna investigation to investigate Mr. Rajaratnam and Galleon for insider-trading.”
According to Dowd, Rajaratnam answered all of the questions put to him by the SEC in 2007, including those about former Intel executive Rajiv Goel, one of the government’s witness against him. Dowd also said that Khan, another former Intel employee who briefly worked as an analyst at Galleon, was fired for trading in a personal account.
Rajaratnam and Chiesi are set to go on trial in October. Both face more than 100 years in prison if convicted.
Oct 21 2015 | 10:41am ET
One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…