Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Tuesday, July 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

Prosecutors Fight Witness in Insider-Trading Case

MANHATTAN (CN) - The government rested its case Wednesday against Galleon hedge fund co-founder Raj Rajaratnam, the alleged ringleader of the largest insider trading scheme in history, with an FBI agent tabulating the executive's allegedly ill-gotten gains using a calculator on the witness stand.

Prosecutors previously had said that Rajaratnam made $45 million on insider-trading, but Special Agent James Barnacle reportedly crunched the numbers to a substantially larger $63.8 million.

U.S. District Judge Richard Holwell has not yet decided on Rajaratnam's motion for acquittal on all counts. But prosecutor Reed Brodsky says that "overwhelming evidence," including wiretaps, e-mails and cooperating witness testimony, points to his participation in insider trading.

Before the defense presents its case on Monday morning, prosecutors will fight to bar the admission of Rajaratnam's key expert witness, University of Rochester Professor Gregg A. Jarrell, who is expected to testify that Rajaratnam traded on publicly available information, not inside tips.

In a 22-page motion to exclude his testimony, Assistant U.S. Attorney Jonathan Streeter wrote that other judges expressed "deep skepticism" of Jarrell's testimony in insider trading trials.

U.S. District Judge Richard Sullivan shot down one of Jarrell's arguments in U.S. v. Contorinis by saying, "The fact that other people traded that day proves that [the defendant] didn't have inside information? ... I'm just not seeing it," the motion states.

Prosecutors say that Jarrell withdrew as an expert from that case before he could be barred from testifying.

Jarrell was also barred from testifying in two other cases involving Countrywide Financial and Citadel Broadcasting, according to the motion.

Defense attorneys responded in a 22-page reply motion that Jarrell has qualified as an expert "numerous times" for other securities fraud cases.

"The government's Motion to Preclude Expert Testimony does not challenge Professor Jarrell's qualifications, his methodology, or the helpfulness of his opinions to the jury, which are the three requirements for admissibility set forth by the Supreme Court," defense attorney Terence Lynam wrote.

Both sides will face off over the expert's admissibility on Friday morning.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.