MANHATTAN (CN) – Billionaire Galleon hedge fund founder Raj Rajaratnam, accused of making $45 million from a massive inside-trading scheme, objected to government evidence and will receive more than 120,000 emails from a witness who will testify against him at his federal trial. In a defense memorandum, Rajaratnam’s attorneys object to tapes of phone conversations with another witness, which the government plans to use as evidence at the trial that begins in March.
Prosecutors notified Rajaratnam on Wednesday about four intercepted phone calls with cooperating witness Ali Far, which the government intends to use as evidence, according to the defense memorandum.
“As to each of the four conversations, the government’s letter indicates that Mr. Far now admits that much of the information Mr. Far communicated to Mr. Rajaratnam during the conversations was fabricated,” wrote John Dowd, lead author of the memo.
In the conversations, Far tells Rajaratnam that he has inside information from contacts at Cisco, Intel and Synaptics – whom he later admitted he did not speak to, the memo states.
“As discussed in Mr. Rajaratnam’s first memorandum on these issues, conversations of this kind are not probative of insider trading or an illegal agreement to engage in insider trading, since the fact of the fabrication establishes that the information is per se immaterial and defeats the very essence of the conspiracy, i.e., the agreement.
“The Second Circuit has repeatedly held that, regardless of one’s subjective intentions, one cannot conspire with a person who merely ‘feigns agreement,’ ‘pretends to agree,’ or ‘secretly intends to frustrate the conspiracy.’ … There could hardly be a more compelling demonstration of the nonexistence of an illegal agreement to engage in insider trading than the fact that one of the alleged co-conspirators manufactured the supposed inside information, re-packaged published analyst reports as insider tips, and even fabricated the existence of fictional ‘buddies’ inside companies,” Dowd wrote.
Also on Thursday, an attorney for Anil Kumar, another government witness against Rajaratnam, agreed to turn over more than 120,000 emails at a hearing’ But he objected to providing Rajaratnam with tax documents and information about his companies Mindspirit and InfoGroup.
Kumar, a former senior partner in the consulting firm McKinsey & Co., pleaded guilty to fraud last month.
Kumar’s attorney Robert Morvillo said that Rajaratnam did not know what the requested tax documents and other information contained. Morvillo said Rajaratnam sought the documents on a “fishing expedition” to impeach Kumar’s credibility, which the attorney said is prohibited under U.S. v. Nixon.
U.S. District Judge Richard Holwell has set the start of the trial for March 8.
More than 15 alleged associates and tipsters have pleaded guilty in what prosecutors call the biggest inside-trading case in history. Rajaratnam is regarded as prosecutors’ main target. He took a major hit in January when Danielle Chiesi, one of the last major-player holdouts, 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 transcripts from wiretaps allegedly recorded her 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.”