Rajat Gupta appeals to reverse conviction

Claims judge made series of incorrect rulings.

Bureau Report

NEW YORK: Former Goldman Sachs board member Rajat Gupta has asked a federal appeals court to reverse his conviction on insider trading charges, arguing that a judge made a series of incorrect rulings during his trial, reported The New York Times.

“This court should reverse the convictions in view of the court’s serious evidentiary errors, which decisively tipped the scales in this case,” wrote Mr. Gupta’s lawyers in its brief to the United States Court of Appeals for the Second Circuit in Manhattan.

A jury found Gupta guilty of leaking Goldman boardroom secrets to his friend, the former hedge fund manager Raj Rajaratnam. Gupta, 64, of Westport, Conn., is free on bail pending the resolution of his appeal, said the report.

Lawyers for Gupta made several arguments on appeal. Among the most significant arguments on appeal is that the government should not have been allowed to use certain wiretap evidence during the trial. Judge Jed S. Rakoff, the trial court judge, allowed the jury to hear two incriminating taped conversations involving Rajaratnam and his traders suggesting that Rajartanam had a source inside Goldman, said the Times report.

On one wiretap – perhaps the most damning piece of evidence presented at trial – Rajaratnam tells a colleague, “I heard yesterday from somebody who’s on the board of Goldman Sachs that they are going to lose $2 per share.” Gupta’s lawyers argued that Rajaratnam’s statement is the unreliable hearsay testimony “of a known fabulist.”

“Without a proper basis for admission, these untestable, unreliable hearsay statements had no place in a criminal trial, and their admission alone compels reversal,” Gupta’s lawyers wrote.

Gupta also argues that Judge Rakoff erred in curtailing the testimony of Gupta’s daughter, Geetanjali Gupta, who had planned to testify that her father was furious with Rajaratnam because of a money-losing investment he had made with the hedge fund manager. Her testimony, argued Gupta’s lawyers, “would have led the jury to question whether Gupta had any motive to tip the man who had stolen millions from him,” said the Times.

The 72-page brief was signed by Seth P. Waxman, the lawyer spearheading Gupta’s appeal. Waxman served during the Clinton administration as a United States solicitor general, the federal government’s top appellate advocate. Now a partner at WilmerHale, he has argued more than 50 cases before the Supreme Court.

Gupta is also facing a huge financial burden, as earlier this month, Goldman Sachs sought $7m legal fees from him, to cover its legal fees and expenses, following a judge’s description of the bank as a “victim” of the crime.

The Financial Times claimed Goldman said it had spent $6.9m investigating allegations that Gupta had shared confidential financial information about the bank with Rajaratnam.

Goldman said its law firm, Sullivan & Cromwell, produced more than 400,000 documents to respond to government inquiries about the trading and prepared 18 witnesses to testify.

The report said lawyers for Gupta are believed to be defending Goldman’s restitution claim, arguing that it should be limited.