MANHATTAN (CN) – Jury selection began Tuesday for billionaire Raj Rajaratnam, accused of making $45 million through his Galleon hedge fund in a massive inside-trading scheme that has resulted in guilty pleas from more than 15 alleged associates and tipsters.
Last week, U.S. District Judge Richard Holwell ordered Rajaratnam to turn over to government a full witness list and any audio recordings he intends to use at trial.
Rajaratnam’s attorneys conducted vigorous discovery for months, while withholding from the government parts of the pretrial discovery it requested.
On Feb. 10, Rajaratnam’s attorneys wrote a letter to the government indicating that “Rajaratnam declines at this time to produce a summary of expert testimony, as one is not required,” Judge Holwell wrote in his Opinion and Order.
Rajaratnam’s attorneys had claimed that since prosecutors said they would not call an expert witness, the defense was not obligated to provide the names of its experts, according to Holwell’s summary.
But Judge Holwell wrote that such a request ran afoul of a judicial precedent barring interpreting a statute in a way that produces “absurd results” – in this case, “subjecting the government to sanctions for providing an honest answer to Rajaratnam’s request.”
In the same letter, Rajaratnam’s attorneys wrote that though they had “not included any wiretapped conversations or consensually recorded conversations on our exhibit list at this time,” they “reserve[d] the right to use any of those materials at trial, which materials are already in the government’s possession.”
Prosecutors disagreed with that reasoning and filed a motion to compel discovery on Feb. 14, which the judge granted on March 3.
Holwell rejected the argument that Rajaratnam’s pretrial disclosures would violate his Fifth Amendment right against self-incrimination.
“On the contrary, the Supreme Court has held that the Fifth Amendment does not prevent the government from compelling disclosures by the defendant before the government has made any,” Holwell wrote.
Rajaratnam’s attorneys claimed their client was waiting for the government to clarify whether it will call Roomy Khan, who has pleaded guilty, or whether it will offer evidence of actual trading by Rajaratnam “in connection with the conspiracy counts,” before he decides whether to call an expert.
“These contentions border on the frivolous,” Holwell wrote. “There is simply no support for an argument that a defendant’s experts are protected until the government reveals more than Rule 16 requires. A defendant would always like more information about the government’s case before revealing anything about his or her own, but Rule 16 conditions a defendant’s disclosure obligations on the government’s having made certain specified disclosures, not on the government’s laying open its entire case or the defendant’s satisfaction.”
Holwell also rejected Rajaratnam’s claim that he did not need to turn over audio recordings until the government disclosed which of the wiretaps it intended to play for the jury.
“[A]ll this shows is that the government has made an effort to comb through thousands of recorded calls and make timely disclosures to comply with the agreement whereas Rajaratnam has made no such effort,” Judge Holwell wrote.
Wiretaps are expected to figure prominently in the trial, as they have in the prosecutions of others who have pleaded guilty to the insider trading scheme.
In January, Danielle Chiesi, one of the last major-player holdouts, whom a wiretap recorded making colorful remarks, pleaded guilty to conspiracy to commit conspiracies fraud. Chiesi, 45, a former consultant to New Castle Funds, was charged with passing inside information to Rajaratnam.
Chiesi made headlines around the world after wiretap transcripts reported her as saying: “Here’s how scared I am about what I’m gonna tell you on AMD [Advanced Micro Devices]. … You put me in jail if you talk … I’m dead if this leaks. I really am … and my career is over. I’ll be like Martha fucking Stewart.”