April 17, 2024

DealBook: Educator Salutes Galleon Trial Defendant

Geoffrey Canada, of the Harlem Children’s Zone, testified in support of  Raj Rajaratnam.Warren Toda/European Pressphoto Agency Geoffrey Canada of the Harlem Children’s Zone testified in support of Raj Rajaratnam.

8:55 p.m. | Updated

Though he took the stand for just 10 minutes, Geoffrey Canada, the president and chief executive of the Harlem Children’s Zone, offered some of the most distinctive testimony in the trial of hedge fund billionaire Raj Rajaratnam.

Mr. Canada, a world-renowned educator whose program in Harlem has been widely lauded for its efforts to close the achievement gap, offered jurors their first glimpse of a generous and big-hearted Mr. Rajaratnam.

That depiction was in sharp contrast to what prosecutors have described as a greedy tycoon who had made millions trading on inside information when he ran the Galleon Group hedge fund.

Mr. Canada told jurors that he met Mr. Rajaratnam about seven years ago while fund-raising for his program. They chatted at Mr. Rajaratnam’s office in Midtown Manhattan, and “hit it off right away,” Mr. Canada said.

They talked about how children from impoverished backgrounds do not have the same opportunities as those with more comfortable upbringings, he testified. Mr. Rajaratnam’s concern for children was immediately apparent, Mr. Canada testified, in part, he said he believed, because Mr. Rajaratnam had children of his own.

The Galleon networkAzam Ahmed and Guilbert Gates/The New York Times Click on the above graphic to get a visual overview of the Galleon information network.

“His wish was that we could level the playing field for kids,” Mr. Canada said. “He wanted our kids to have the same support his kids had.”

Though Mr. Canada did not disclose how much money Mr. Rajaratnam had given to his cause, he described Mr. Rajaratnam, a former board member of the Harlem Children’s Zone, as generous and said that his support was “extraordinary” and “spontaneous.”

He said he considered Mr. Rajaratnam a “dear friend,” and even helped guarantee part of Mr. Rajaratnam’s $100 million bail after his arrest in October 2009.

Mr. Canada’s testimony could stand out for jurors, who have grown accustomed to hearing mainly from Wall Street executives, including Lloyd C. Blankfein, chief executive of Goldman Sachs.

Wall Street has been particularly fond of supporting Mr. Canada’s cause, which helps administer a range of social and educational services to families within a roughly 100-block area of Harlem. Though some researchers have said that there is not enough evidence to measure the effect of the costly initiative, the program has attracted admirers from Harvard to the White House.

More broadly, Mr. Canada is something of a darling among a certain set of politicians, educators and academics for his efforts to create a pipeline for urban youth from the “cradle to college.” He was prominently featured in a recent documentary on urban education, “Waiting for Superman.”

The rest of Wednesday’s session in Federal District Court in Manhattan could not have stood in sharper contrast.

The government declined to cross-examine Mr. Canada, whose appeared briefly between the earlier and later parts of the testimony of Richard Schutte, the former president of Galleon.

No such courtesy was extended to Mr. Schutte, who, from virtually the start of cross-examination, butted heads with Reed Brodsky, the prosecutor.

On the stand, Mr. Schutte has cut a stoic figure, offering little in the way of colorful descriptions or humorous anecdotes that some of earlier witnesses had. That attention to precision served him well in the defense’s direct examination of him, when he often corrected a defense lawyer, Michael Starr, when he was asked technical questions.

During that time, Mr. Starr presented hundreds of exhibits relating to stocks about which prosecutors contend Mr. Rajaratnam received confidential information. Among them were research reports and news articles that, the defense has argued, were reason enough for Mr. Rajaratnam to make the trades at the center of the case.

Mr. Brodsky spent a much time Wednesday offering a different set of exhibits that conflicted with those presented by the defense. Mr. Brodsky repeatedly asserted that the defense exhibits had been cherry-picked, and that they represented a small fraction of the research and notes that Galleon analysts received.

For instance, the defense showed research reports that expected poor quarterly financial results for Xilinx, a semiconductor company whose shares Mr. Rajaratnam is accused of betting against using insider tips.

Mr. Brodsky offered several reports where analysts said they saw potential upside for the company, including one by an analyst from Bear Stearns who predicted the company would perform according to Wall Street expectations. Mr. Schutte said he did not recognize the analyst’s name.

As it turned out, the company revised its outlook down, and the Bear Stearns analyst was wrong.

“Now I know why I didn’t recognize the guy’s name,” Mr. Schutte said.

Mr. Brodsky also challenged assertions by the defense in connection to the sale of shares in Goldman Sachs.

Mr. Rajaratnam is accused of selling shares in Goldman in late October, after a tip from a former board member, Rajat K. Gupta, that the bank would soon report its first quarterly loss as a public company.

Defense lawyers sought to deflect that accusation, in part, by suggesting that Mr. Rajaratnam sold shares because the firm had a large investment in the Industrial and Commercial Bank of China, whose stock was faring poorly. Mr. Brodsky tried to demonstrate the inconsistency of that argument. He showed jurors that just two days earlier, with Goldman’s investment in the Chinese bank performing nearly as poorly, Mr. Rajaratnam had actually bought 150,000 shares of Goldman stock.

Article source: http://feeds.nytimes.com/click.phdo?i=1e424982fbcebdacd848cc41ab7a44cb

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