Raj Rajaratnam's lawyer took his last shot at a trial to keep his client out of prison, telling jurors on Thursday that phone taps and a parade of government witnesses did not prove that the hedge fund manager traded on material inside information about companies.
Defense lawyer John Dowd also fired back at the prosecution's contention that his client had corrupted his friends and colleagues, telling the jury that it was people who testified against the Galleon Group hedge fund founder who were corrupt or had lied.
In his closing arguments, Dowd pressed a consistent defense theme that Rajaratnam, 53, had traded on research or public information.
Sri Lankan-born Rajaratnam is the central figure in a sweeping government probe of insider trading at hedge funds. Nineteen out of 26 people charged have pleaded guilty in the case, the biggest Wall Street insider trading prosecution since the 1980s.
The government can't make all the public information disappear, Dowd said quietly as he stood at a podium in Manhattan federal court. They can only hope you ignore it.
To convict Rajaratnam, the government's evidence must convince jurors beyond a reasonable doubt that he received material non-public information from people who had a duty not to disclose it, and that he knew it was wrong to trade on it.
If found guilty, the former billionaire could go to prison for up to 25 years on charges of conspiracy and securities fraud.
The trial began on March 8 and jurors are likely to begin deliberations on Monday. A prosecutor was to rebut the defense closing later on Thursday. There is no court session on Friday because of the Good Friday holiday.
Dowd cited discussions he said were known in the market in early 2006 about chipmaker Advanced Micro Devices Inc looking to buy graphics chipmaker ATI Technologies Inc.
He reminded the jury that Rajaratnam owned ATI shares by March 2006, and that ATI itself was buying back its own stock.
You don't see ATI sitting next to Mr Rajaratnam do you? said Dowd, who began his summation late Wednesday.
There is no doubt at all that those discussions weren't material. They were preliminary.
Dowd also said a slew of published reports speculated about a possible deal between the two companies so it was not material non-public information as alleged by the government. AMD and ATI announced a $5.4 billion merger in July 2006 and completed the deal three months later.
Prosecutors accuse Rajaratnam of making $22.9 million on ATI stock based on inside information. It is the single biggest amount included in the government's total of $63.8 million it says he illicitly made between 2003 and March 2009.
Three people who pleaded guilty to criminal charges in the case agreed to testify against Rajaratnam in hopes of receiving lighter sentences. They included former McKinsey & Co partner Anil Kumar and former Galleon portfolio manager Adam Smith.
A U.S. prosecutor, Reed Brodsky, said in his closing argument on Wednesday that by corrupting his friends and his employees Rajaratnam gained an unfair advantage over other investors.
Dowd countered on Thursday that during cross-examination, Kumar had acknowledged dodging taxes and Smith changed his story.
Kumar and Smith were caught in their own lies, and all the documents and all of the research just don't lie, Dowd said.
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Reporting by Grant McCool and Jonathan Stempel; Editing by Martha Graybow and Ted Kerr)