Rajaratnam's brother took his notebooks
Shortly after Raj Rajaratnam was arrested on October 16, 2009, his brother Rengan went into the Galleon Group LLC’s co-founder’s office and took his sibling’s notebooks, former Galleon trader Adam Smith told prosecutors, according to a court filing made yesterday.
Raj Rajaratnam’s lawyers yesterday asked a judge to bar Smith from testifying about Rengan Rajaratnam’s actions on October 16. Prosecutors want to offer the account from Smith, who may testify for the government today, “to prove the existence” of a conspiracy and “Rengan’s membership in it,” they wrote.
In other court papers filed yesterday in Manhattan federal court, prosecutors also want Smith to testify about statements Rengan allegedly made to him months after Raj Rajaratnam’s arrest.
“Rengan told Smith that, when someone discussed ‘Kamal’ with Raj, Raj would say it was a reference to Kamal Das, a sell- side analyst (and not Kamal Ahmed, a Morgan Stanley investment banker whom the government intends to prove provided inside information to Smith, which Smith in turn provided to Raj),” Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky wrote in their filing. The filing includes a summary of an interview that the Federal Bureau of Investigation did with Smith on Feb. 1, 2011. Smith was present for a meeting at Galleon days after Rajaratnam’s arrest.
Very Emotional
“Raj was non-specific and very emotional, according to the individual,” the report said. “Raj told the employees that he was a fighter, that he was going to fight.” In another report from Jan. 25, 2011, an individual who isn’t identified told agents that Rajaratnam complained about his treatment by the FBI when he was arrested, saying agents “would not let him use the bathroom.” Raj Rajaratnam, 53, is the central figure in the largest crackdown on hedge-fund insider trading in US history. The Sri Lankan-born money manager is accused of making $45 million from tips leaked by corporate insiders such as Goel. Rajaratnam denies wrongdoing, saying he based trades on research.
This morning, the defense cross-examination of Rajiv Goel, who had worked in Intel Corp.’s treasury group and was a close friend of Rajaratnam’s, continued.
Not Charged
Neither Rengan Rajaratnam nor Kamal Ahmed has been charged with wrongdoing. David Tobin, an attorney for Rengan Rajaratnam, didn’t immediately return a call. Douglas Tween, Ahmed’s lawyer, said in an interview that his client did “nothing illegal or improper” and is cooperating “with Morgan Stanley and has answered every question they’ve put to him.”
Raj Rajaratnam’s lawyers say Smith’s testimony about the notebooks should be excluded because their client, while under arrest, had no control over his brother’s actions. Smith pleaded guilty on January 26 and is cooperating with prosecutors.
Also, the defense says that documents were removed from Rajaratnam’s office at the instruction of a defense lawyer to prepare for a bail hearing that day.
“It would be impermissibly prejudicial, and of no probative value whatsoever, for the government to elicit testimony suggesting that Mr. Rajaratnam and his brother were concealing evidence,” defense attorney John Dowd wrote.
Smith may also discuss a conversation between Rajaratnam and former Galleon trader David Lau on October 24, 2008, according to a court filing. In it, Rajaratnam “referred to Goldman Sachs’ financial performance for the fourth quarter of 2008, and stated ‘I can get that number,’” according to the filing.