Prosecutors Say Khan, Motey Could Testify Against Whitman

Feb 28 2012 | 5:34am ET

Prosecutors yesterday laid out part of their plan of attack against hedge fund manager Doug Whitman, who is accused of insider-trading.

In a filing in Manhattan federal court, the U.S. Attorney's Office cited three witnesses it may call to testify against the Whitman Capital founder. Whitman was arrested and charged earlier this month for allegedly earning more than $900,000 by participating in two insider-trading schemes.

Prosecutors identified two of the possible witnesses: former Intel Corp. employee Roomy Khan and former consultant Karl Motey. The third potential witness is a "parallel tippee of Roomy Khan" who received allegedly confidential information about Google Inc. at "around the same time as Whitman," according to the filing.

Both Khan and Whitman have pleaded guilty in the Justice Department's wide-ranging insider-trading crackdown, and both are cooperating with prosecutors. Khan was once identified as a key witness against Galleon Group founder Raj Rajaratnam—she formerly worked at that hedge fund—but did not testify in that trial, which resulted in Rajaratnam's conviction. It is thought that Khan's previous guilty plea to insider-trading charges kept prosecutors from calling her to the stand at that trial.

Prosecutors also used the filing to argue against the defense's request to move the case from New York to northern California. Whitman's lawyer earlier this month said in a filing that, "at its heart, this is a Silicon Valley case and not a Wall Street case," and noted that most of the witnesses and Whitman himself live in California. U.S. District Judge Jed Rakoff, who has scheduled a July 30 trial date, will hear arguments about the change of venue tomorrow.

"The testimony of Khan and this cooperating witness will show, among other things, that Whitman’s claims in his memorandum artificially minimize the impact of the illegal conduct on the Southern District of New York,” Assistant U.S. Attorney David Leibowitz wrote. “At the very heart of the conspiracy and the substantive insider trading charges in this case, the defendant voluntarily caused his criminal conduct to occur in the Southern District of New York."

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…