Having lost their bid to have the insider-trading case against them tossed, some of the Galleon Group defendants may be ready to wave the white flag.
A lawyer for one of the seven men accused in the case told U.S. District Judge Richard Sullivan that some of the seven defendants in the case—five of whom sought the dismissal—might plead guilty, after Sullivan ordered them to face trial. Sullivan set a May 9 trial date for the men, as well as for a sixth.
“I’m not sure all the defendants will be going to trial,” Cynthia Monaco, a lawyer for Zvi Goffer, said. Asked later by Bloomberg News, she didn’t specify who might be near a deal or who would be pleading guilty either way.
Goffer is accused of being at the center of one of two interlocking insider-trading rings; the other features Galleon founder Raj Rajaratnam. Goffer formerly worked at Galleon and went on to found hedge fund Incremental Capital.
A lawyer for one of the other men, lawyer Jason Goldfarb, disagreed with his fellow defense attorney, saying there have been “no meaningful negotiations” and “absolutely no indication that any of the cases will be resolved without a trial.”
The five men had argued that the government had put forth a “convoluted theory” of insider-trading in the case, but Sullivan said yesterday that they “have not made a persuasive argument.” He dealt a further blow when he said the wiretaps at the center of the government’s case would be admitted—with one possible caveat.
A lawyer for another defendant, Craig Drimal, another former Galleon employee, blasted the government’s “cavalier disregard for marital privacy” in recording 178 phone calls between Drimal and his wife. Another 152 calls were between Drimal and other family members.
The lawyer, Janeanne Murray, argued that all of the wiretaps should be tossed to punish the government for encroaching on spousal privilege. Sullivan said he wasn’t prepared to be so harsh.
“It’s not clear to me it’s all or nothing,” the judge said. But he did say he would exclude some of the taps if he found the government made any intercepts inappropriately.
Prosecutors said that 143 of the 178 calls between Drimal and his wife were recorded for less than two minutes, the maximum allowed for the monitoring agent to decide whether the communication was a personal one between a husband and wife.
“Sometimes it’s hard to tell who it is,” Assistant U.S. Attorney Andrew Fish told Sullivan.