Trade-by-trade and sometimes using a calculator, an FBI agent testified at hedge fund founder Raj Rajaratnam's insider trading trial how the government matched phone records with transactions that it contends were based on illegal confidential information.
FBI agent James Barnacle, under questioning by prosecutor Reed Brodsky in the fifth week of the trial in Manhattan federal court, marched the jury through dozens of charts and records of phone calls, some of which were taps on Rajaratnam's mobile phone.
With the help of a calculator on the witness stand, Barnacle tabulated profits made by Rajaratnam's Galleon Group. Barnacle's testimony to the 12 jurors will likely carry into Wednesday when the government is expected to rest its case. The defense estimates its side of the case will take a week in what prosecutors call the biggest probe of insider trading at hedge funds on record. Extensive FBI phone taps are a hallmark of the case.
When chip-maker ATI Technologies Inc announced in July 2006 that it was being bought by Advanced Micro Devices Inc
Rajaratnam, 53, is charged with 14 counts of conspiracy and securities fraud. He is accused of making $45 million in illicit profits between 2003 and March 2009 on leaked stock tips from highly placed sources in corporate America.
His lawyers contend that research, analysis and market speculation, not material company secrets, guided his trades at Galleon, which had $7 billion under management at its peak. If convicted of securities fraud, the Sri Lanka-born money manager faces as much as 20 years in prison.
In another example, Barnacle pointed to a phone call on July 2, 2007, after the market closed, between Rajaratnam and co-conspirator Roomy Khan, a former employee with Intel Corp
On July 3rd 2007 manager code TMT at Galleon at 9:35 a.m. there was a purchase of 400,000 shares of Hilton stock, Barnacle said, reading off a chart projected in the courtroom. Brodsky had asked him what activity Galleon funds controlled by Rajaratnam had shown in Hilton stock on that day.
The jury will not hear evidence of videotapes, fax and phone records from 1998 linking Rajaratnam to Khan, an important cooperator, the judge ruled earlier on Tuesday.
The ruling marks a success by the defense in limiting evidence in the high-profile trial about Khan, who pleaded guilty in the case and gave investigators information about Rajaratnam.
Federal prosecutors do not plan to call Khan to the witness stand. But they had asked U.S. District Judge Richard Holwell if they could introduce two short videotapes and faxed information from Intel that they contend proved that Khan gave Rajaratnam secret corporate information as far back as late 1997 and early 1998.
Holwell ruled that the records were inadmissible because there were other ways to introduce the evidence and the alleged events of those years were not part of the charges against Rajaratnam. Prosecutors were allowed to introduce records from 2006 and 2007 of phone calls, trades and instant messages that they contend show that Khan and Rajaratnam conspired to gather secrets about Google Inc
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Editing by Lisa Von Ahn, Richard Chang and Matthew Lewis)