Gupta Defense Suggests Galleon People 'Exaggerated' Insider Claims

May 31 2012 | 10:18am ET

Former McKinsey & Co. chief Rajat Gupta's lawyers hammered away at the credibility of prosecution witnesses yesterday at their client's trial on insider-trading charges.

In a combative cross-examination of former Galleon Group trader Michael Cardillo—which featured as much sparring with prosecutors as it did with the witness—lead Gupta lawyer Gary Naftalis sought to show that Galleon was full of liars and exaggerators, people who puffed up their contacts and their alleged inside information. Cardillo has pleaded guilty to insider-trading and is cooperating with prosecutors, and Galleon founder Raj Rajaratnam, a longtime friend and business partner of Gupta's, was convicted and sentenced to 11 years in prison.

Gupta is charged with passing confidential tips about two companies he served as a director, Goldman Sachs and Procter & Gamble, to Rajaratnam.

In one exchange, Naftalis asked Cardillo if he had heard "that Mr. Rajaratnam claimed he was giving Intel inside information to George Soros," who has denied the allegation. Cardillo said he "remembered something about Soros," but that "I don't remember Raj being a part of it."

Cardillo also testified that he didn't think it was "feasible or probable" that Kraft CEO Irene Rosenfeld was a Rajaratnam source, after Naftalis asked if Rajaratnam had instructed his brother to cooperate. "I didn't think he was ever going to get that information."

But Cardillo said there were only "rare occasions" when people would "exaggerate their sources of inside information" at Galleon's morning meetings.

And Naftalis did not fail to employ one of the oldest strategies in the defense attorney's playbook, implying that Cardillo was testifying to save his own skin.

"You determined to cooperate with the prosecution to better your situation. True?" Naftalis asked.

"Correct," Cardillo replied.

Naftalis' cross was frequently interrupted by prosecutors, who successfully objected that the defense lawyer's questions were based on third-party out-of-court statements. Among the questions struck down were, "Were there others at Galleon who claimed to have sources of inside information that they did not have?"

Those objections weren't the only ill-tempered exchanges between the adversaries.

Prosecutors complained that Naftalis was making jury-audible comments to his fellow defense team members, including saying "Got him" during his questioning of Cardillo. Naftalis shot back that prosecutors were making their objections too long.

U.S. District Judge Jed Rakoff told both sides to cool it. "I think we are down to a very polite form of name-calling," he said, just a day after he implored the lawyers to "sharpen" their presentations so as not to bore the jury.


In Depth

Kettera Q&A: The Advantages of Alternative Investment Platforms

Oct 28 2016 | 5:52pm ET

The past several years have seen a distinct push towards easier and cheaper access...

Lifestyle

Midtown's Plaza District Fades As Manhattan Office Landscape Shifts

Nov 22 2016 | 6:32pm ET

Lower leasing costs, more efficient office space and the hope of projecting an image...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR