Nov 5, 2009 8:45 am US/Central
Feds: 14 Charged In $25M Insider Trading Case
Investigation Related To Raj Rajaratnam's Galleon Group
NEW YORK (AP) ―
Federal prosecutors say criminal charges have been filed against 14 people, including attorneys and Wall Street professionals, in a widening $25 million insider trading case that has already snared one of the richest men in America.
According to court papers filed in U.S. District Court in Manhattan against seven of the individuals, a man who worked at Galleon Group identified as Zvi Goffer operated an insider trading network in 2007 that included a lawyer who fed tips gleaned from his firm's work on acquisition deals.
Last month, authorities arrested Galleon Group founder Raj Rajaratnam and five others in an insider trading scheme that the Securities and Exchange Commission estimated produced $25 million in profits for its participants. A bail hearing for Rajaratnam, who is free on $100 million bail, was scheduled for later Thursday.
Rajaratnam has denied through his lawyer participating in the scheme to use inside information to trade stocks at a profit ahead of public announcements.
In court papers, new details about the alleged scheme emerged to show how the government built its case.
The papers put Goffer in a central role. It was not immediately clear who would represent him at an initial court appearance.
A criminal complaint prepared by FBI Agent David Makol said Goffer paid others to obtain secrets about public companies' planned merger and acquisition activity that he then used to execute profitable securities trades.
The complaint said Goffer provided conspirators with prepaid cellular telephones so they could communicate in a way that reduced their chance of detection by law enforcement.
Among those who fed him tips that reached Goffer was Arthur Cutillo, a lawyer with Ropes & Gray, a law firm that held secrets regarding mergers and acquisitions, the complaint said.
The complaint said the government broke the case with the help of a confidential informant and three court-authorized wiretaps, including one on Goffer's cellphone that captured conversations in 2007 and 2008.
The U.S. attorney in Manhattan, the FBI and the Securities and Exchange Commission scheduled a midday news conference Thursday to discuss the case.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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