Opening Statements In 2nd Galleon Trial Show Parallels With Rajaratnam Defense

May 19 2011 | 2:24pm ET

Zvi Goffer, accused of running one of the two interlocking insider-trading rings in the Galleon Group case, was fired by Galleon founder Raj Rajaratnam, his lawyer told jurors yesterday.

In his opening statement, William Barzee said that Rajaratnam, convicted last week of insider-trading in the first Galleon trial, "fired" Goffer "because he lost so much money" during his eight months at the hedge fund in 2008, nearly $1 million. That claim, seeking to distance his client from the disgraced Rajaratnam, may not touch on the particulars of the case against Goffer. But Barzee wasn't finished.

Echoing Rajaratnam's failed defense strategy, Barzee told the jury that "trading on tips, speculation and word of mouth is not illegal." He compared Goffer to "a gold prosepector search for gold in a river," in this case, "the river of gossip that you hear about on Wall Street."

Lawyers for each of the three defendants made their opening statements in the case yesterday, following the prosecution's initial presentation of their case. Michael Ross, representing Goffer's brother, Emanuel, said that his client became a top trader honestly.

"People can be successful by making the right guesses," he said.

Michael Sommer, the lawyer for Michael Kimelman, impassionedly proclaimed that the government had no serious evidence against his client: "Nothing on tape, nothing from an informant, no throwaway phone, no payments. It's simple."

Sommer's statement about "throwaway phones" refers to the fact that prosecutors say the Goffers—but not Kimelman—used disposable cellular phones to trade confidential information.

Prosecutor Andrew Fish, of course, presented quite a different picture of the three men, who worked together at Zvi Goffer's hedge fund, Incremental Capital.

Fish said that the men, the only three of the nine charged in the case not to plead guilty, bribed lawyers at Ropes & Gray to obtain inside information.

"This is a case about corrupt securities traders," Fish said. "All three joined together to trade on the information received from the bribed lawyers."

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