Rajaratnam defense attacks star U.S. trial witness
A lawyer for accused hedge fund manager Raj Rajaratnam attacked a star government trial witness on Tuesday, saying he cut a plea deal to avoid criminal charges of money laundering and tax dodging.
When you got caught you pinned it all on Raj, didn't you? Rajaratnam's main lawyer, John Dowd, tersely asked Anil Kumar in cross-examination at the Manhattan federal court trial.
No, Kumar replied. Dowd said: You did what you could to get out of jail. Wrong, Kumar shot back.
Kumar, a former McKinsey & Co partner, appeared tense and combative at times while trying to explain the terms of his cooperation in the case. At other times, he calmly recounted what he described as an illicit deal to give inside tips to Rajaratnam, his former business school classmate.
He also described a Miami vacation with the one-time Galleon Group billionaire and their spouses soon before the two were arrested in what became the biggest insider trading case in decades. He said Rajaratnam was aware then that a former employee was secretly cooperating with authorities.
The cross-examination, which Rajaratnam watched intently, came after the jury heard more of his phone conversations that were secretly recorded by the FBI. One was between Rajaratnam and a friend on the Goldman Sachs board, Rajat Gupta.
The then Goldman director is heard relaying what the Goldman board discussed in mid-2008 about possible acquisitions, including Wachovia bank and insurance giant AIG. Jurors paid close attention and took notes as they were shown transcripts of the recordings on video screens.
The Galleon case, unveiled by prosecutors in October 2009, has shaken the secretive $1.9 trillion hedge fund industry. Nineteen people have pleaded guilty, while Rajaratnam has vowed to clear his name at trial.
Prosecutors contend that Rajaratnam courted friends in high places who fed him stock tips. His lawyers contend that he only traded stocks based on public information and Galleon's own expert research and analysis.
Indian-born Kumar, 52, has pleaded guilty to conspiracy and fraud in the case and is cooperating hopes of a lighter sentence. He also has reached a $2.8 million civil settlement with U.S. market regulators in the insider trading case
Kumar told the jury he has been under investigation by tax authorities and owed $1 million in back taxes, which he has since paid to the Internal Revenue Service.
You're trying to cut a deal. You're trying to give up the money without paying the taxes, isn't that right, Mr Kumar? Dowd asked in a series of questions about Kumar's amended tax returns dating back to 2004.
No. No. No, Kumar replied testily.
The jury heard a digital recording of a Rajaratnam mobile phone call on July 29, 2008, with Gupta, who sat on the Goldman board at the time. Market regulators accuse Gupta of leaking inside information, but he has not been criminally charged.
Rajaratnam asks about rumors of a possible Goldman acquisition of Wachovia. This was a big discussion at the board meeting, Gupta is heard saying. Buy a commercial bank. And you know, it was a divided discussion in the board.
Gupta is heard saying that if Wachovia was a good deal, the board could be interested in it, and that American International Group also was in the discussion mix.
Wells Fargo & Co paid $12.5 billion for Wachovia, which was weighed down by a huge portfolio of mortgage securities, in a deal completed on December 31, 2008. AIG, now almost entirely owned by the government, nearly collapsed in autumn 2008.
Gupta stepped down from Goldman's board in May 2010. He is also a former McKinsey top executive, and until recently sat on the boards of AMR Corp and Procter & Gamble.
Jurors also heard a recording of Kumar telling Rajaratnam about planned layoffs at online auction site eBay Inc before they were announced on October 6, 2008. The defense argues that published analysis and press reports accurately reported the size and timing of layoffs before any calls with Kumar.
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Writing by Martha Graybow; additional reporting by Basil Katz; editing by John Wallace, Gary Hill)
© Copyright Thomson Reuters 2024. All rights reserved.