Second Galleon Trial Begins; Rajaratnam Tape To Be Heard

May 17 2011 | 10:16am ET

Raj Rajaratnam isn’t a defendant in the second Galleon Group insider-trading trial, which started yesterday, but the hedge fund founder and convicted felon was omnipresent during the first day.

U.S. District Judge Richard Sullivan and attorneys for both sides began sifting through 100 potential jurors, spending nine hours going through the 68 items on the jury questionnaire with 45 of them. One of the questions specifically asked about the Rajaratnam trial, which ended last week with the Galleon founder’s conviction on all counts.

On trial now are three men, including a former employee of Rajaratnam’s, Zvi Goffer. Goffer is accused of leading one of two interlocking insider-trading rings—Rajaratnam headed the other—and is on trial with two employees of a hedge fund, Incremental Capital, he founded after stints at Galleon and Schottenfeld Group. In addition, Goffer’s brother, Emanuel, and Michael Kimelman face conspiracy and securities fraud charges.

One of the matters on the questionnaire deals specifically with Rajaratnam’s trial: “Have any of you seen, heard or read news reports about the trial of Raj Rajaratnam?” Prior to the start of jury selection, Sullivan warned both prosecutors and the defense team, “Mr. Rajaratnam is going to be a factor in this trial. He’s going to be mentioned or in fact heard on these tapes.”

Prosecutors plan to play at least 60 wiretapped conversations. One is between Rajaratnam and Zvi Goffer.

Sullivan dismissed one juror who told him she had read about Rajaratnam’s being found guilty.

“I know what I read in the other stories and I don’t think I can block it from my mind,” she said.

Sullivan told the potential jurors that the trial could last five or six weeks. Jury selection is expected to be completed today, with opening statements beginning later today or tomorrow.

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