May 19, 2024

DealBook: Rajaratnam’s Lawyer Casts Doubt on Witnesses’ Credibility

“If it’s public, you must acquit.”

Though the defense lawyer, John Dowd, uttered the stilted reference to Johnnie Cochran’s famous line in the O.J. Simpson trial just once at the start of his closing statement, it quickly became a favored theme on Thursday.

His client, Raj Rajaratnam, the co-founder of the Galleon Group hedge fund, is accused of pocketing more than $50 million in illicit profit from insider tips that include Intel earnings and layoffs at eBay. Mr. Dowd took aim at those alleged tips on Thursday and the phone calls and cooperating witnesses that the government cited as evidence.

And just as the prosecutor, Reed Brodsky, used recordings and transcripts of conversations to bolster his argument to jurors, so, too, did Mr. Dowd. Though he played just one recorded call, Mr. Dowd relied heavily on transcripts from the trial to highlight what he considered inconsistencies in testimony from government witnesses.

“Thank God for cross-examination,” said Mr. Dowd, who maintained that several of the cooperators had cracked when subjected to questioning.

Mr. Dowd spoke in a gravelly monotone with few gestures and an avuncular manner, his glasses perched atop his nose. Unlike Mr. Brodsky, who shouted and roamed before the jurors with an intense energy, Mr. Dowd remained behind his lectern, reading notes from a binder.

In systematic fashion, Mr. Dowd attacked the credibility of the cooperating witnesses and the alleged tips associated with them.

He began with Anil Kumar, a former executive at the prestigious consulting firm McKinsey Company, who testified that he passed a number of insider tips to Mr. Rajaratnam for money.

Mr. Dowd said the former consultant was paid for honest work, not insider tips. The lawyer presented transcript pages where Mr. Kumar says that initially Mr. Rajaratnam proposed a legitimate agreement – not one to pass on insider tips.

“Anil Kumar denied twice under oath that he ever agreed to commit insider trading,” Mr. Dowd said. Therefore, “you cannot convict Raj of conspiracy to insider trade.”

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.

While the government stressed that the tips afforded Mr. Rajaratnam an advantage over ordinary investors, Mr. Dowd cited one that lost the hedge fund money.

“This is the first insider trading case in history where the government claims the defendant lost $67 million,” Mr. Dowd said.

Mr. Dowd also brought up Adam Smith, the former Galleon portfolio manager and an important government witness.

“We haven’t talked about Smith, but you can’t believe him either,” Mr. Dowd said, leaning over the lectern. “Smith has changed his story so many times that he doesn’t know whether he’s coming or going.”

Throughout his statement, Mr. Dowd reinforced the defense assertion that all of alleged inside information was already public. During their case, the defense inundated jurors with news articles and research reports speculating on the deals and events that form the government’s case against Mr. Rajaratnam.

“That’s how things work in the real world,” he said, raising his voice slightly. “In the real world, these deals were public weeks and months before their announcement.”

He even argued at one point that the alleged tipsters themselves should have read some of the reports. When Mr. Kumar allegedly tipped Mr. Rajaratnam that eBay was set to lay off employees, for instance, he did not have an exact number, Mr. Dowd said.

“Ladies and gentlemen, if Kumar couldn’t figure out the number of layoffs, it’s because he hadn’t read the newspaper,” he said.

Mr. Dowd spared jurors from having to review again the hundreds of exhibits they’d seen last week.

“The government can’t stand it when I show you these articles,” he said.

Mr. Dowd repeatedly reminded jurors that there needed only to be reasonable doubt for them to acquit his client — even in instances where bits of the alleged tip were not yet public.

“You can’t convict Raj by splitting hairs,” he told jurors.

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