(Corrects amount in first sentence to $1 million from millions)

NEW YORK - Hedge fund manager Raj Rajaratnam made $1 million in two minutes of frantic calls after receiving an inside tip about a huge investment in Goldman Sachs Group Inc at the height of the financial crisis, the Galleon founder's insider trading trial heard.

Prosecutors on Wednesday played an FBI phone tap to the New York jury to support their allegation that Rajaratnam knew a day before it was announced in September 2008 that Goldman would receive a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc .

Sri Lankan-born Rajaratnam, 53, is accused of receiving tips about the investment bank from his friend Rajat Gupta, who was then on Goldman's board of directors. Gupta is also a former global managing director of the elite McKinsey & Co consultants.

In the phone tap of a September 24, 2008, call between Rajaratnam and his personal Galleon trader, Ian Horowitz, he is heard describing his efforts the previous day to buy shares two minutes before the 4 p.m. stock market close.

I got a call at 3:58, right? Rajaratnam said. Saying something good might happen to Goldman, right?

But when he called Galleon after the phone call with Gupta, the first trader he reached was unable to complete the trade.

I, so I told Ananth to buy some, he was f****** around, he can't, you know. So I went to Gary and just buy me, right?

The full name of trader Ananth was not known and the other person was Gary Rosenbach, then a Galleon manager.

The government contends Rajaratnam made close to $4 million in improper gains based on leaks from Gupta, whom prosecutors describe as an unindicted co-conspirator in the biggest Wall Street insider trading case since the 1980s. Gupta has been sued by the U.S. Securities and Exchange Commission.

In all, Rajaratnam is accused of making $45 million in illicit profits from 2003 to March 2009 on stock tips from high-placed corporate insiders.

A week ago, the government called Goldman chief executive Lloyd Blankfein to the witness stand in Manhattan federal court. He testified that information at board meetings was confidential and was not be shared with outsiders.

Prosecutors also showed the jury on Wednesday an internal Galleon document indicating that by June 2008 Gupta had about $16 million in an array of Galleon funds.

Rajaratnam had advance knowledge from Gupta in October 2008 that the bank was on its way to its first quarterly loss as a public company, according to earlier trial evidence and reinforced by prosecutors on Wednesday.

The tapes were played during the testimony of Adam Smith, a former Galleon portfolio manager who pleaded guilty to securities fraud and conspiracy in January.

Smith agreed to cooperate with the government in its case against his former boss. On Tuesday, he had described pressure at the hedge fund to get an edge in trading, and said he gave inside tips from a Morgan Stanley banker to Rajaratnam.

Under cross-examination on Wednesday, Smith acknowledged he had lied to Galleon about losing one of the firm's laptops after Rajaratnam's October 2009 arrest, and had actually thrown it away in a rural part of upstate New York, where he lives.

Smith, 39, also acknowledged pressure from prosecutors and the FBI, including wiretaps last year after he left Galleon. The hedge fund managed $7 billion at its peak. It was wound down in late 2009 without losses to investors.

One light note Wednesday came when Assistant U.S. Attorney Andrew Michaelson misinterpreted a pm reference in his notes, meant to indicate that Smith had been a portfolio manager.

When you were, uh, prime minister, Michaelson began, prompting much laughter in the courtroom.

Not yet, Smith countered.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.

(Additional reporting by Jonathan Stempel; Editing by Gary Hill)