MANHATTAN (CN) - A wiretap recording from September 2008 showed Raj Rajaratnam defiant in the face of the global stock market crash and, ironically, trying to dodge the telephone wiretaps that would lead to his arrest a year later. "I'm a warrior," the billionaire co-founder of the Galleon hedge fund said. "They can't, they can't kill me. October's my month."
Rajaratnam was arrested in October 2009 and accused of spearheading the largest insider-trading scheme in history. He allegedly made $45 million from the scheme, which has brought guilty pleas from more than 15 alleged associates and tipsters.
The wiretap recording was played during the second day of direct examination of former financial consultant Anil Kumar, one of the tipsters who testified against Rajaratnam in a cooperation agreement with the government. (To download the 4-minute audio clip, click here.)
Kumar, a former executive at McKinsey & Co., testified last week that Rajaratnam initially paid him a six-figure salary to reveal confidential information about his clients.
On Monday, Kumar said that Rajaratnam gave him a $1 million bonus for a tip about Advanced Micro Devices' acquisition of graphics chip maker ATI Technologies, which Kumar said would "shake up" the industry.
After the acquisition was announced, Kumar said, Rajaratnam called him a "star" and a "hero," whom Galleon associates were celebrating.
Kumar said he was "nervous" that Galleon employees knew him as a source of the tip.
He added that Rajaratnam "terrified" him by sending him a FedEx package of about 50 pages of confidential information about Advanced Micro Device's "arch-competitor" Intel, because McKinsey had an "open-door" policy that made it easy for colleagues to discover the documents.
"I asked my assistant to shred it," Kumar said.
In 2007, Advanced Micro Devices (AMD) began courting Abu Dhabi as a place to build manufacturing factories to cut costs, Kumar said.
On Aug. 15, 2008, Kumar received an email saying that AMD and Abu Dhabi had reached a "handshake agreement on the deal" and that an announcement would be likely in six to eight weeks, evidence showed.
The morning after he got the email, Kumar told Rajaratnam that Abu Dhabi would invest $6 billion to $8 billion, and urged him to place trades before word "leaked out" to Wall Street, a wiretap showed.
Kumar said Rajaratnam found another tipper knowledgeable about the Abu Dhabi deal: Danielle Chiesi, a New Castle Investment trader who pleaded guilty in January.
Chiesi made headlines when her indictment quoted excerpts from wiretap transcripts in which she said that if her participation were revealed, it would turn her into "Martha fucking Stewart."
Recorded calls of Rajaratnam and Chiesi played in court were no less colorful.
Kumar said Rajaratnam told him that Chiesi had an "intimate relationship" with a major player in the deal, Intel CEO Bob Moffat, and also extracted inside information from Hector Ruiz, CEO of Advanced Micro Devices.
In one wiretap recording, Chiesi told Rajaratnam that Moffat is married with "four kids." She was also heard calling Moffat a "geeky type" and "not like, charismatic, like you are."
Chiesi referred to Rajaratnam as "babe," "baby," and "love" throughout the recordings.
According to Kumar, Rajaratnam said that Chiesi shared inside tips about the deal with several people on Wall Street, reducing the value of the information. Kumar said Rajaratnam told him, "Your value to me is now a little bit diminished."
Another recording from Sept. 30, 2008, weeks after the stock market crash, showed Chiesi telling Rajaratnam, "I know everybody's being investigated," and Rajaratnam replying that he never placed calls from his cell phone.
An FBI witness has testified that only Rajaratnam's work number was tapped.
Chiesi said she knew she knew that "people are going to investigate me ... because there are assholes in this world ... and they're jealous," the recording showed.
Kumar enters his third day of direct examination today (Tuesday).
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