Prosecutors Defend Galleon Wiretaps

Oct 28 2010 | 4:13am ET

Federal prosecutors have gone to bat to keep the wiretaps at the center of the insider-trading case against Galleon Group founder Raj Rajaratnam in play.

In a court filing, Assistant U.S. Attorneys Jonathan Streeter and Avi Weitzman wrote that Rajaratnam's legal team had offered no reason to exclude the more than 2,400 recorded conversations from his criminal trial. "Rajaratnam failed to prove that any Government representative deliberately decided" the federal judge who approved the wiretaps in March 2008, Gerald Lynch, "or had reckless disregard for whether they were deceiving the judge."

A lawyer for Rajaratnam, John Dowd, wrote to U.S. District Judge Richard Holwell, who is overseeing the trial, earlier this month that "falsehoods and critical omissions pervade this affidavit." Dowd also claimed that if prosecutors or the Federal Bureau of Investigation had offered a more complete description of the Securities and Exchange Commission probe that preceded the criminal one, it "would have resulted in the denial of the wiretap application."

Not so, according to Streeter and Weitzman. "Rajaratnam has not and cannot make this showing," they wrote, noting that Lauren Goldberg, a former prosecutor who worked on the wiretap affidavit testified at a hearing earlier this month that the SEC probe had "hit a bit of a wall" and that the regulator had "developed largely 'weak or nonexistent' circumstantial cases involving stocks it was investigating."

The prosecutors said they used the SEC's best evidence to win the cooperation of former Galleon employee Roomy Khan, an alleged member of the insider-trading circle that has -ensnared 21 people, including Rajaratnam. Khan appears on many of the wiretaps. Streeter and Weitzman said their case would include testimony from some of the participants in the taped conversations in addition to the taps themselves.

It is unclear when Holwell will rule on the legality of the wiretaps. Rajaratnam's trial is set to begin in January; he faces decades in prison if convicted.

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