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Gupta Prosecution Rests
Jun 08, 2012
The federal government today rested its case against Rajat Gupta, the former Goldman Sachs director it has accused of leaking confidential information to convicted insider trader Raj Rajaratnam. Here's some of the news that's come out of the trial since my last update:
- Goldman CEO Lloyd Blankfein testified that meetings of Goldman's board are confidential. Stephen Pierce likewise testified that Warren Buffet’s company’s investment in Goldman, which Gupta is accused of leaking to Rajaratnam, was confidential.
- The prosecution presented evidence that Gupta’s key card was used at Galleon’s office, including at 11:36 a.m. on a day when Gupta's calendar showed a Goldman board teleconference at 11:30 to discuss the bank's earnings. The defense pointed out that it was not impossible that the card was used by someone other than Gupta, and asked how the card could have been used in two different places at Galleon within the same minute.
- Gupta's attorney, Gary Naftalis used cross-examination to show that Michael Cardillo, the former Galleon trader who spoke of Rajaratnam’s “guy on the P&G board,” was trying to limit his own sentence by helping prosecutors and had worn a wire to record a friend who’d invited him to a wedding celebration with family. Naftalis also asked Cardillo whether people at Galleon “exaggerate[d] their sources of inside information.”
- Law professor Peter J. Henning argued on a New York Times blog that motive is a key issue in the case. One motive proffered by the prosecution was that Gupta was an executive in Rajaratnam's organization. Another was that Gupta's relationship with Rajaratnam was profitable in that, for example, Rajaratnam agreed to resolve a dispute over an investment in a way more favorable to Gupta than Rajaratnam had wanted. But the defense said the investment was ultimately lost and Gupta thought about suing Rajaratnam over it.
- Judge Jed S. Rakoff excluded some prosecution testimony, saying it concerned a scheme of Rajaratnam’s in which Gupta was not involved and accusing prosecutors of “tarring” the defendant.
- The trial hasn't been without humor, including from old friends Rakoff and Naftalis and from Blankfein, the prosecution witness.
Looking forward, the biggest news is that Gupta's lawyer said the defendant will probably testify. (The Wall Street Journal's Michael Rothfeld had previously collected some arguments on whether he should.)
The defense holds that the wrong man is on trial, and it has already used a cross-examination to point a finger at Goldman trader David Loeb, who has not been charged.
The judge predicted the defense would conclude Tuesday after a much shorter case than the prosecution's: the trial began May 21. Of course, the defense only has to show reasonable doubt, and it's been trying to raise doubts all along.