HD:Wiretaps key in conviction of ex-hedge fund giant
By TOM HAYS and LARRY NEUMEISTER
Associated Press
Published: Thursday, May 12, 2011 at 3:07 a.m.
Last Modified: Thursday, May 12, 2011 at 3:07 a.m.
NEW YORK - The jury that returned a guilty verdict to all charges against a one-time billionaire hedge fund founder proved to have a voracious appetite for the audiotapes of him talking to fellow traders and friends at public companies about stocks he wanted to trade.
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Billionaire co- founder of Galleon Group Raj Rajaratnam exits Manhattan federal court with his attorney terence Lynam, Wednesday, May 11, 2011, in New York. The former Wall Street titan was convicted Wednesday of making a fortune by coaxing a crew of corporate tipsters to give him an illegal edge on blockbuster trades in technology and other stocks _ what prosecutors called the largest insider trading case ever involving hedge funds.(AP Photo/ Louis Lanzano)
Before they returned the verdict Wednesday against Raj Rajaratnam, jurors listened to 66 taped conversations over 12 days. They heard some of the 45 conversations played during the trial multiple times, enabling prosecutors to declare their maiden effort to use wiretaps to prosecute insider trading cases a huge success. Legal observers agreed.
The office of U.S. Attorney Preet Bharara "took wiretaps for a test drive, and I'd say it was a resounding success," said Stephen Miller, a former federal prosecutor in private practice in Philadelphia.
The tapes were "a gold mine," said Steven Scholes, an attorney in private practice in Chicago who formerly worked in the Securities and Exchange Commission Division of Enforcement. "There's an old saying that you can't cross-examine a tape," he said.
Kenneth Herzinger, another former attorney in the SEC enforcement division, predicted prosecutors will expand the use of wiretaps to other white-collar prosecutions.
"I view the use of wiretaps as a game changer and something that certainly the defense bar has taken notice of and I think that Wall Street has taken notice of," said Herzinger, now a San Francisco attorney in private practice.
But the success of the wiretaps might make some insider trading cases that lack them harder to prosecute, said Rita Glavin, a former federal prosecutor now in private practice.
