Saturday, 18 April 2015
Last updated 5 hours ago
Mar 15 2011 | 1:09am ET
Prosecutors at the Raj Rajaratnam insider-trading trial yesterday played more than a dozen taped conversations between the Galleon Group founder and such trial figures as Danielle Chiesi, his brother Rengan and the government's star witness, Anil Kumar.
The conversations with Chiesi were played as Kumar testified that she and Hector Ruiz, the former CEO of Advanced Micro Devices, had an affair.
Kumar said during his second day of testimony that Rajaratnam told him that "someone on Wall Street… had an intimate relationship with my client, AMD, who was able to provide more information than I was." That "someone," Kumar said, was Chiesi, a former executive at hedge fund New Castle Partners whose affair with another source, former IBM executive Robert Moffat, has already come out in the case.
Kumar said that Rajaratnam told him to warn Ruiz that Chiesi "talks to a lot of people" and that he should "stop doing this."
"I said, 'Raj, you've got to be kidding. He's a senior client; he's older than me,'" Kumar testified. "I said I couldn't do it, I couldn't say, 'I heard you were having a relationship with Danielle."
Ruiz's spokesman, Andrew Merrill, denied that his client had had an affair with Chiesi, who has pleaded guilty in the case.
"Any suggestion that the relationship was intimate is untrue," he said.
Untrue, perhaps, but judging from the taped phone calls, not necessarily out of character for Chiesi.
On an Aug. 15, 2008, phone call in which he allegedly passed a Kumar tip to Chiesi, Rajaratnam told Chiesi, "We've got to keep this radio silence," adding, "not even to your little boyfriends."
"I don't have any," Chiesi shot back.
At other times, Chiesi greeted Rajaratnam with a "Hey, baby," or "Hi, babe." Other coy lines included, "I love you" and "I love that."
The two were also not above a little flirting. Discussing Moffat, Chiesi told Rajaratnam, "He's more like a geeky type. He's not charismatic like you are."
At other times, she expressed a prescient concern about the future.
"I know everybody's being investigated," she said on one call. "Do you think I could buy it here? Honestly? And I'm glad that we talk on a secure line. I appreciate that." The call, obviously, was being recorded by the Federal Bureau of Investigation.
On the same call, she later said, "I'm a little nervous because, you know, people are going to investigate me. I really believe that."
While the tapes featured several well-known names, one introduced a new one: Former McKinsey partner David Palecek, the third former McKinsey partner to be dragged into the case.
Palecek was a business school classmate of Rajaratnam's brother Rengan at Stanford University. Jurors heard a taped phone call between the brothers in which Rengan said Palecek told him to "buy as much" AMD stock "as you can as soon as you can." The two agreed that they should get closer to Palecek, and Rengan suggested Galleon hire Palecek's wife.
"We want access to him," Raj Rajaratnam said. "He is a little dirty, right?"
"He's definitely thinking about playing ball," Rengan responded.
Palecek died last year at the age of 37 of a virulent staph infection.
"David was not dirty or even a 'little dirty,' Palecek family lawyer Catherine Redlich said. "He was a man of great integrity."
"What the tape does not reflect is that Mr. Palecek never agreed to 'play ball' with the Rajaratnams, never received money from them and never agreed to put his wife on the Galleon payroll."
The government also played tapes that it claims show Rajaratnam's planned cover-up of his illegal trading: an "e-mail trail" to demonstrate that his investment ideas were not, in fact, based on insider-information.
On April 22, 2008, Rajaratnam called Galleon managing director Krish Panu after speaking with Kumar, who had allegedly told him about a Spanvision Inc. top. The conversation then moved, according to prosecutors, to planning the cover-up.
"I'll send you an e-mail and say, 'Have you guys thought about Spansion?'" Rajaratnam said.
"Have a corporate record," Panu said.
"Yeah, we just have an e-mail trail," Rajaratnam responded.
On another call about Spansion, Rajaratnam told two Galleon associates, "Keep conversations just personalized to the three of us, you know, so that we just protect ourselves."
"You just have to be careful, right?" Rajaratnam told one former Galleon employee. "We just have a e-mail trail, right, that uh, I brought it up."
"That's good," the employee responded.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…