Posts tagged “group founder”

Rajaratnam Trial To Start March 8

February 11th, 2011

Galleon Group founder Raj Rajaratnam’s trial on insider-trading charges has been delayed by a week.

U.S. District Judge Richard Holwell, who is presiding over the case, issued an order setting a new start day of March 8. The trial had been set to begin on Feb. 28.

It is unclear why Holwell chose to delay the trial; he did not offer a reason. But this week, lawyers for both sides and some witnesses have been coming to the Manhattan courthouse to work on pretrial matters. Reuters reports that attorney scheduling was the reason for the move.

Among those matters is an outstanding subpoena issued by Rajaratnam’s legal team to consulting giant McKinsey & Co. The two sides yesterday said they had reached an agreement on most matters, while Holwell sided with McKinsey on some of Rajaratnam’s document requests.

McKinsey had been fighting the subpoena, saying it sought “troves of irrelevant, unspecific and inadmissible documents.” Rajaratnam’s team shot back that the case has McKinsey “written all over it;” one of the 19 people to plead guilty in the case is a former senior director at the firm, and a former head of McKinsey, Rajat Gupta, is alleged to have passed confidential tips to Rajaratnam, although he himself has not been charged.

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Prosecutors: Witnesses Offer Evidence Of Rajaratnam’s Insider Trading

February 9th, 2011

Raj Rajaratnam

The noose around Raj Rajaratnam appeared to tighten further this week as prosecutors revealed some of the evidence they plan to use against the Galleon Group founder.

At least three cooperating witnesses have provided evidence of insider-trading by Rajaratnam, assistant U.S. Attorney Jonathan Streeter wrote in court documents. Two of those three are former Galleon employees.

One, Michael Cardillo, pleaded guilty to insider-trading charges last month as part of a plea deal. Streeter said that he approached prosecutors in October to discuss cooperating.

“Members of the trial team met with Cardillo and debriefed him about evidence he had against Rajaratnam,” Streeter wrote. “This included Rajaratnam’s trading based on inside information relating to Proctor & Gamble, as well as Cardillo had against another co-conspirator not previously identified by the government to the defendant.”

Streeter made the filing in response to a bid by Rajaratnam’s lawyers seeking to exclude discussion of four stocks from the trial, including Procter & Gamble. The trial is set to begin on Feb. 28.

According to another cooperating witness, former McKinsey & Co. consultant Anil Kumar, Rajaratnam went to jail just days after another deal about which he had advanced knowledge. While it is unclear whether Rajaratnam traded or sought to trade on that information, about Cisco System’s acquisition of Starent Networks, prosecutors said that Rajaratnam told Kumar that he knew about the deal.

Cisco announced its purchase on Oct. 13, 2009, three days before Rajaratnam’s arrest.

Streeter said Kumar’s claims “had very recently been corroborated through evidence supplied by Adam Smith,” another former Galleon trader who is cooperating in the investigation.

Kumar himself made a filing this week, asking a judge to junk a subpoena from Rajaratnam’s lawyers seeking documents from his McKinsey days. McKinsey has also objected to the subpoena.

Kumar called the request “excessively burdensome,” and another, seeking his tax returns and personal trading records, “at most…an attempt to impeach Mr. Kumar’s credibility.”

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Rajaratnam Brother An Alleged Co-Conspirator In Insider-Trading Case

February 3rd, 2011

Raj Rajaratnam

Prosecutors are turning up the heat on Galleon Group founder Raj Rajaratnam just weeks before he goes on trial for insider-trading: It has emerged that Rajaratnam’s younger brother, Ragakanthan, is an unindicted co-conspirator identified in the most recent guilty pleas in the case.

The government has not publicly identified Ragakanthan Rajaratnam as “CC-1″ in the charges against former Galleon trader Michael Cardillo. But The Wall Street Journal reports that the co-conspirator is, in fact, the former Galleon chief’s brother.

Ragakanthan Rajaratnam has not been charged with any wrongdoing. But according to the Cardillo charges, the brothers Rajaratnam traded on confidential information about J.M. Smucker Co. and Procter & Gamble during Ragakanthan Rajaratnam’s three years as a Galleon portfolio manager.

Cardillo, who pleaded guilty last week, worked for Ragakanthan Rajaratnam and executed his trades, according to the charges against him.

Ragakanthan Rajaratnam, known as “R.K.” during his Galleon days, is now a vice president in Clorox Co.’s marketing department. He worked at General Mills, Kraft Foods and ConAgra Foods before joining Galleon in 2006.

Raj Rajaratnam’s trial on 14 insider-trading counts is set to begin on Feb. 28. In the last few weeks, prosecutors have moved to isolate the biggest fish they’ve nabbed in the whole investigation, winning guilty pleas from his former co-defendant, Danielle Chiesi, and two former Galleon traders, including Cardillo. All told, 19 people have pleaded guilty in the case; seven, including Rajaratnam, are fighting the charges.

The government has also turned up the heat on Rajaratnam’s other brother, Regnan, another former Galleon employee. In December, John Kinnucan, the research firm chief who publicly rejected a Federal Bureau of Investigation offer to cooperate in the investigation, said he received a subpoena seeking information about Sedna Capital Management, a now-defunct hedge fund founded by Regnan Rajaratnam.

It is unclear whether prosecutors intend to pursue charges of any kind against either Ragakanthan or Regnan Rajaratnam, or if they hope the increased pressure will convince Raj Rajaratnam to seek a plea deal.

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SEC Wants Judge To Force Rajaratnam To Hand Over Wiretaps

December 22nd, 2010

Rajaratnam and Chiesi

Having lost his fight to keep thousands of wiretaps out of his criminal trial, Galleon Group founder Raj Rajaratnam will now have to renew his fight to keep them out of the hands of the Securities and Exchange Commission.

The SEC yesterday demanded that Rajaratnam and former co-defendant Danielle Chiesi, both accused of insider-trading, turn over some of the 18,150 wiretaps that they received from prosecutors in the crimin

al case. And it seems likely that the two will lose at least the first round: The judge presiding over the civil case, U.S. District Judge Jed Rakoff, had ordered them to turn over the taps even before U.S. District Judge Richard Holwell, who is overseeing the criminal case, ruled on their legality.

received an at least temporary reprieve when a federal appeals court ruled that Rakoff erred by granting the SEC’s request before Holwell ruled. But now that Holwell has ruled that the wiretaps were, in fact, legal, it is unclear that Rajaratnam and Chiesi will still have the appeals court’s ear.

“Given that the legality of the wiretaps has now been established, and given that the SEC is only seeking relevant intercepts, the SEC’s ‘significant’ right to obtain the relevant intercepts outweighs whatever arguable remaining privacy interests defendants and others may have,” the agency said in its filing.

“The SEC’s significant right of access to relevant, legally intercepted communications relating to the defendants’ insider trading scheme, and the substantial prejudice it will suffer if deprived of these intercepts, clearly outweighs any remaining, diminished privacy interests implicated in disclosing the relevant intercepts. Without the recordings, the SEC likely will be deprived of important admissions and in many instances the best, most direct evidence of wrongdoing.”

Rajaratnam and Chiesi may reprise their earlier arguments against giving the SEC the taps, noting that the agency lacks the authority to use wiretaps.

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Boo Hoo! Rajaratnam Moll Cries Over Miranda Rights

November 24th, 2010

Raj and Danielle

Nothing like high-paid consultants suddenly getting all dumb about their rights as they are being arrested.  That’s the sob story Danielle Chiesi, former hedge fund consultant and insider-trading co-defendant of Galleon Group founder Raj Rajaratnam, is giving in her first testimony on the stand.  Her lawyers are trying to suppress her statements made on the morning of her arrest.

Chiesi, formerly of New Castle Partners, said she was not informed of her Miranda rights for 90 minutes. Five Federal Bureau of Investigation agents woke her at 6 a.m. on Oct. 16, 2009, and told her she was being arrested.

During that time, Chiesi said the agents questioned her and offered her an opportunity to cooperate in the probe. She said the agents wanted her to place a call—which would be recorded—to a person on the West Coast. Chiesi did not identify that person.

Prosecutor Reed Brodsky countered that Chiesi was advised of her rights twice and that she only remembers the second. But U.S. District Judge Richard Holwell would not allow Brodsky to question her about the information covered during the first 90 minutes she was questioned in her Manhattan apartment.

Unlike Rajaratnam—who answered only monosyllabically during a pro-forma hearing earlier this year about a potential conflict of interest on the part of his lawyers—Chiesi testified at length and in some detail. She even admitted that she briefly considered accepting a deal and wearing a wire.

Chiesi, who admitted being nervous on the stand, said she considered taking the FBI agents, who she called “very nice,” up on their offer to cooperate. She also noted that at least one of them, “Claire,” won the affections of her usually antisocial cat.

“She’s usually very mean to people, and now I’m getting arrested and she’s in a good mood,” Chiesi said.

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German Prosecutors Indict Ponzi Fraudster After A Year In Detention

November 17th, 2010

Suspect was detained in a German prison for over a year.

During WWII, the German Gestapo would think nothing of incarcerating a suspect for a year or longer before perhaps filing charges. Maybe that’s why German prosecutors were comfortable keeping alleged hedge fund fraudster Helmut Kiener on ice for a year as they got their ducks all lined up in a row.

Prosecutors raided Mr Kiener’s home office in Aschaffenburg, near Frankfurt, a year ago and put him under investigative custody. Finally, Kiener has been formally charged with defrauding investors, banks and brokers of €345 million.

Würzburg prosecutors pounded the K1 Group founder with 86 counts of forgery, 35 counts of aggravated fraud and one count of tax evasion. Kiener was arrested last October on suspicion of fraud, one of eight K1 employees or associates arrested in the alleged Ponzi scheme.

Lutz Libbertz, defence lawyer, said Mr Kiener would take the stand in court “to expose how greedy the customers were” who were lured by K1 brochures boasting of stellar returns of 17 per cent a year.

“The investors were allegedly promised substantial profits even though both funds had massive losses,” Dietrich Geuder, a spokesman for the prosecutor’s office, said. “Pretend profits could only be paid out using newly invested money.”

A second suspect in the case, identified as Claus Z., was also charged today. He was a managing director of Treukapital Treuhandverwaltung, K1′s administrator.

Z. was one of three previously unidentified people arrested last week as the investigation continues. Two of them, 35 and 80 years old, were managing directors of Treukapital. The other was the auditor of two K1 funds.

Treukapital’s David Zuendorf was among the five people arrested earlier. Two Kiener associates have been arrested in the U.S., while the fifth, Dieter Frerichs, former managing director of two K1 funds, committed suicide in July.

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