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Insider trading jury hears closing arguments

'Cheating became a part of his business model,' the prosecutor says about former hedge fund magnate Raj Rajaratnam in closing arguments.

April 21, 2011|By Nathaniel Popper, Los Angeles Times

Reporting from New York — The motivation of a billionaire former hedge fund magnate accused of insider trading, a prosecutor said, boiled down to this: "It was about being on top. It was about beating everyone else."

With those words, Assistant U.S. Atty. Reed Brodsky summarized the government's case against Raj Rajaratnam in one of the highest-profile Wall Street criminal trials in years.

In a closing argument that lasted more than five hours Wednesday, Brodsky displayed trading records and replayed wiretapped phone calls, some of the evidence that he said provided "devastating proof of the defendant's guilt."

"Cheating became a part of his business model," the prosecutor said.

In response, the defense said the government wanted jurors to "rely on fictions and flights of imagination."

The case against Rajaratnam centers on five separate alleged schemes to trade stocks based on nonpublic information — four of them seemingly corroborated by wiretapped calls between Rajaratnam and former business partners who have since pleaded guilty.

The jury heard Rajaratnam burst into laughter after his brother, Rengan, colorfully talked about a possible new source of inside information at consulting firm McKinsey & Co.

"Scumbag," said Rengan, who worked at Rajaratnam's firm, Galleon Group. "Everybody is a scumbag."

In other calls played for the jury, Rajaratnam bantered flirtatiously with Danielle Chiesi, a trader at another hedge fund firm.

"Tell me I'm the best on AMD now," Rajaratnam said to Chiesi after they discussed financial results for Silicon Valley chip maker Advanced Micro Devices Inc.

"Look, I never say you're not the best," Chiesi shot back.

As the recordings played, Rajaratnam, sitting with his legal team, betrayed no emotion.

The government says Rajaratnam secured information from high-level sources with knowledge of some of the best-known companies in the world, including Google Inc., Intel Corp. and Goldman Sachs Group Inc.

After enumerating the alleged schemes, Brodsky listed eight methods that he said Rajaratnam used to cover his tracks, including talking on prepaid cellphones and concealing payments to offshore accounts.

"You don't do these things if what you're doing is right and legal," the prosecutor said.

Defense lawyer John Dowd was more sedate in his presentation, which began late in the day and is set to conclude Thursday.

Dowd told the jury that Rajaratnam's trades were based on legitimate research and that in today's markets there is very little information that is not public in some form.

"In the real world information can become public whether a company wants it or not," Dowd said.

The defense lawyer then tore into the government's witnesses, many of whom were testifying to win reduced sentences in their own cases.

Dowd described one of those witnesses, Anil Kumar, a former consultant at McKinsey who gave Rajaratnam information about AMD, as "one of the greediest and most corrupt people you've ever met."

nathaniel.popper@latimes.com

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