Federal prosecutors told a jury Wednesday that exhaustive wiretap evidence proves a Wall Street heavyweight routinely used a cadre of "corporate spies" to get rich off inside trades, while the defense insisted he was merely one of the market's savviest investors.
When the Manhattan jury listened to FBI recordings of Raj Rajaratnam, "you heard the defendant commit his crimes time and time again in his own words," Assistant U.S. Attorney Reed Brodsky said in closing arguments at the biggest insider trading trial in history.
"The tapes show he didn't believe the rules applied to him," the prosecutor added. "Cheating became part of his business model." Defense attorney John Dowd, in his closing, called the government's case unfair and misleading. He argued the evidence instead showed his client was "disciplined" and "careful with clients' money" at his Galleon Group of hedge funds.
The government also relied on the testimony of a parade of cooperators it says were corrupted by Rajaratnam, including a disgraced technology industry executive and analysts. Prosecutors also implicated a former Goldman Sachs board member as one of the tipsters, in part by calling Goldman chairman Lloyd Blankfein to testify the tapes showed that the board member violated confidentiality policies.
The defense attacked the credibility of the cooperators, who pleaded guilty to various securities charges and took the witness stand to save their own skins.
"Their testimony is unreliable and worthless," Dowd said while his client sat quietly on a bench behind a team of attorneys crowded around the defense table. "When the government came knocking, they blamed it all on Raj."
Authorities have said Rajaratnam made profits and avoided loses totaling $68 million from illegal tips. Galleon, prosecutors say, became a multibillion-dollar success at the expense of ordinary stock investors who did not have the access to secrets about the earnings surprises of public companies and early word of mergers and acquisitions.
Defense closing arguments in the Rajaratnam case were expected to conclude Thursday, followed by a government rebuttal. -- AP