MANHATTAN (CN) – A federal judge ruled Tuesday that billionaire Galleon hedge fund founder Raj Rajaratnam, accused of making $45 million from a massive inside-trading scheme, can retrieve tax records and other documents from Richard Choo-Beng Lee, an admitted accomplice in the fraud.
Lee, who pleaded guilty in 2009, filed a motion to quash the “overbroad” subpoena from Rajaratnam, who Lee claimed was on a “fishing expedition.” Lee also said Rajaratnam was looking for privileged tax records.
At a hearing last Thursday, Anil Kumar, who also pleaded guilty for his role in the scheme, likewise accused Rajaratnam of “fishing” for documents, rather than seeking those specifically related to his case. Kumar was compelled to turn over more than 120,000 emails.
“Fishing expeditions” are prohibited under U.S. v. Nixon.
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, widely described in the press as a “big fish.”
On Thursday, U.S. District Judge Richard Holwell decided that no “fishing” was involved in Rajaratnam’s subpoena, and that the requested documents were directly relevant to Rajaratnam’s case.
Noting that the documents Rajaratnam requested are important to his case and not otherwise obtainable, Holwell wrote that “there is little reason to conclude that Lee’s tax returns are privileged under the federal law of privilege.”
On Wednesday, Holwell also granted permission for co-conspirator Danielle Chiesi, who is out on bail after pleading guilty to the fraud, to visit her family in Utah on vacation.
One of the last holdouts, Chiesi’s admission of guilt in January stuck another blow to Rajaratnam’s case.
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.”