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

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.