Throughout the trial of Raj Rajaratnam, which could submit to the jury, as early as Monday, there is an elephant in the courtroom: Rajat Gupta k...
Mr. Gupta, once one of the most respected in the world, business is not considered here, nor has he been charged criminally. Yet spent scarcely a day when the jury at the trial of Mr. Rajaratnam - more great initiates of the Government case in a generation - is not on Mr. Gupta, the former head of the firm McKinsey & company of Council.
Jurors listened to a wiretap on which Mr. Gupta, a former Director at Goldman Sachs, says Mr. Rajaratnam, who led the Group of Galleon hedge fund, discussions of secret Council of the Bank.
Alessandro Della Bella/Keystone, via Associated Press Rajat k. Gupta, who was appointed as an accomplice.They heard a tape of Mr. Rajaratnam benefiting a colleague a Goldman Director had informed him the income of the Bank in advance a public announcement. On another registered appeal, Mr. Rajaratnam said its trader that he had received word that something good was going to happen to Goldman.
Prosecutors also presented business records and telephone bills establishing that Mr. Rajaratnam traded stock Goldman shortly after phone calls with Mr. Gupta.
Yet, Mr. Gupta is not mentioned in the indictment of the Government of Mr. Rajaratnam. Office of the Attorney of the United States in Manhattan, studying role Mr. Gupta in the case of at least three years, he has appointed an accomplice of Mr. Rajaratnam but has not charged him criminally.
Instead, federal prosecutors have built their formal charges against Mr. Rajaratnam around five witnesses cooperants have pleaded guilty to engaging in insider of conspiracies with the defendant.
Legal experts say there are myriad reasons to conduct a criminal investigation of accuse some accomplices while asking prosecutors not others.
"What motivates these decisions is the strength of the evidence against each individual accessory as well as tactical considerations," said Anthony M. Sabino, Professor of law at the University of St. John.
There was no indication that Mr. Gupta may play a role in the case of Mr. Rajaratnam in the months before the trial. But in early March, a week before the selection of the jury, the Securities and Exchange Commission has sent shockwaves through the corporate US when he filed a civil administrative proceedings against Mr. Gupta. The Agency accused of leaks of discussions of the Conference Room of Mr. Rajaratnam of Goldman and Procter & Gamble, where he served as a Director before resigning last month.
"The S.E.C. allegations are totally unfounded," Gary P. Naftalis, counsel for Mr. Gupta, said at the time. "Record of 40 years of Mr. Gupta of ethical conduct, integrity and commitment to protect the confidential information of its customers is beyond reproach".
Sudden drop of Mr. grace Gupta has surprised the business world. An Indian of Kolkata and graduated from Harvard Business School, Mr. Gupta is the most prominent executive led by a broad survey of Government initiated the hedge fund.
Global General Director of McKinsey, Mr. Gupta, 62, was a trusted adviser to business leaders including Jeffrey r. Immelt of General Electric and Henry r. Kravis of private equity Kohlberg Kravis Roberts & Company firm. A prominent philanthropist, he has held a senior advisory position to the Bill & Melinda Gates Foundation.
Over the last decade, he grew close to Mr. Rajaratnam, a major financial supporter of the Indian School of Business, graduate highly regarded school that Mr. Gupta has helped start over. On his retirement from McKinsey in 2007, he went to business with Mr. Rajaratnam, founder of a company of private capital. Mr. Gupta has also invested with Mr. Rajaratnam.
It was during this period - a stretch of nine months in 2008 - the Government wiretapped cell phone to Mr. Rajaratnam. These recordings has helped the Government to bring charges against 26 persons, 20 who have pleaded guilty.
Federal prosecutors appear to have weaker evidence against Mr. Gupta that against some other accomplices of Mr. Rajaratnam. For example, two witnesses - Anil Kumar and Rajiv Goel - cooperants are on several eavesdropping permutation of the stuff with Mr. Rajaratnam.
In the case of Mr. Gupta, federal prosecutors played that a wiretap on which Mr. Gupta has disclosed Goldman, Mr. Rajaratnam Conference room discussions. On an appeal of July 2008, Mr. Gupta said Mr. Rajaratnam that the Council of the Bank was considering a purchase of Wachovia or the American International Group.
Prosecutors had no evidence, however, that Mr. Rajaratnam traded on this stuff.
Certain rules may also prevent Solicitors for use against Mr. Gupta, two of the wiretap more incriminating played during the trial, say legal experts.
In an appeal, Mr. Rajaratnam tells a colleague, "" I heard yesterday from someone who is a member of the Board of Goldman Sachs that they will lose $2 per share. "" In the other, Mr. Rajaratnam said its operator, "I received a call saying that something good will happen to Goldman."
Because these conversations were between Mr. Rajaratnam and his employees, a judge may declare their inadmissible hearsay evidence, which means that it is too remote or speculative to be used against Mr. Gupta.
But prosecutors may try to use the conversations against Mr. Gupta under what is known as an exception to the rule of complicit hearsay. The theory is that the statements of Mr. Rajaratnam subject Goldman made the conspiracy alleged between Mr. Rajaratnam and Mr. Gupta.
Without these two statements of Mr. Rajaratnam, referring to advice on Goldman, prosecutors would be forced to rely on indirect evidence - as trading records and telephone invoices - to establish the guilt of Mr. Gupta.
In a civil case of the S.E.C., the Agency has a lower burden of proof that federal prosecutors in a criminal action. An administrative law judge S.E.C. is also not subject to the rules of hearsay.
In an unusual turn, Mr. Gupta has continued last month of S.E.C. claiming that an administrative procedure had unfairly prevented him a trial by jury in Federal Court. Mr. Gupta have protections over it that he does in an administrative proceeding, including the right to consider evidence of the S.E.C.. A judge has not yet ruled on the issue.
If the S.E.C. prevails, a judge could impose financial penalties on Mr. Gupta and bar him serving as a Director or officer of a public company.
