Former Galleon Chairman Raj Rajaratnam will have to spend the next 11 years in jail, unless his attorneys can convince a judge to throw out his insider-trading conviction by taking aim at the most compelling evidence provided by government prosecutors: wiretap conversations showing that Rajaratnam traded stocks based on a series of illegal tips.
And some legal experts say it could work.
The FOX Business Network has learned that in their appeal, Rajaratnam’s attorneys at the law firm of Akin Gump Strauss Hauer & Feld will try and show that the government’s application to wiretap conversations between Rajaratnam and government informants left out important pieces of information that might have persuaded a federal judge not to grant the wiretap application in the first place.
While these conversations provided what jurors believed was compelling evidence to convict Rajaratnam on multiple counts of securities fraud, the way in which the government went about getting the wiretaps has been controversial.
Federal Judge Richard Holwell said it was “particularly disturbing” that government prosecutors left out of application the past criminal records of one of the informants who was recorded providing Rajaratnam with insider tips.
And the judge didn’t stop there. Holwell called it a “glaring omission” for federal prosecutors to omit from the application the fact that Rajaratnam had been subject of a past investigation by the Securities and Exchange Commission, where he gave a deposition and generated documents and testimony from other witnesses.
The problem for the government, according to people close to the defense, is that in order to obtain a wiretap, prosecutors and agents in the FBI must show that they’ve exhausted other investigatory methods to make their case. Howell said by leaving out these details, there is a “substantial preliminary showing that the government recklessly or knowingly made a misleading statement or omission.”
Is that enough to reverse Rajaratnam’s conviction? Howell made these statements in denying the defense motion to suppress the wiretaps during Rajaratnam’s long trial.
People close to the defense team tell FOX Business that his attorneys believe it’s their best shot at winning an appeal and a new trial, and one that they believe just might work.
Federal judges have a history of allowing compelling evidence to stand at trial even if the methods used to obtain that evidence might not be proper. But appellate courts often take a dimmer view of aggressive methods by the government in which prosecutors don’t follow the rules, particularly in areas such as using wire taps where there are legitimate privacy issues at stake.
“The fact is that all the cooperators in the case became cooperators because of these wire tapes, and if you can suppress the wire tape, that means the conviction will be vacated and they will order a new trial without the wire tapes,” said one person close to the defense team.
“If the wire tapes get thrown out, there are the fruits of those wire-tapes that the government was able to get because of those wiretaps, which might get thrown out as well and that would be a critical blow for the government.”
A spokesman for Akin Gump had no comment; a spokesman for the FBI had no comment.
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