Witness, lawyer battle at NY insider trading trial

AP News
Posted: Mar 15, 2011 5:51 PM
Witness, lawyer battle at NY insider trading trial

The lawyer for a wealthy investment manager accused in the biggest insider trading scandal ever to hit the hedge fund world engaged in a combative verbal battle Tuesday with a top government witness, trying to cast his client's one-time friend as a man facing a long prison term who is desperate to win his freedom.

Former financial consultant Anil Kumar grew increasingly impatient and defensive with attorney John Dowd as he explained his encounters with Galleon Group founder Raj Rajaratnam, a one-time billionaire whose family of hedge funds was forced to shut down after his October 2009 arrest.

Under earlier questioning from a prosecutor over three days, Kumar said Rajaratnam paid hundreds of thousands of dollars into overseas accounts he controlled in return for inside information. The two men met at the University of Pennsylvania's Wharton School in the early 1980s. Kumar is testifying under a plea agreement that can win him leniency if he answers questions honestly. He has admitted feeding inside information to Rajaratnam.

The testy exchanges between Kumar and Dowd came on the same day that the government played an audiotape of a phone call in which a former Goldman Sachs board member could be heard telling Rajaratnam that Goldman was discussing whether it was wise to acquire a bank such as Wachovia Bank or an insurance company like American International Group Inc. The government had said it would introduce evidence at trial that Rajaratnam was aided by his relationship with the ex-board member, who is not criminally charged.

But it was the exchanges between Dowd and Kumar that highlighted the day, with both men engaging in lengthy verbal sparring.

"You provided services to Mr. Rajaratnam?" Dowd asked Kumar, who worked for McKinsey & Co. for more than 23 years before his 2009 arrest.

"Illegal services," Kumar responded.

"Nevertheless services, correct?" Dowd asked.

"Yes," Kumar said. He paused before again adding: "illegal services."

Repeatedly, Dowd tried to restrict what Kumar said by warning that he had asked a yes-or-no question and it should be answered accordingly.

It was the first sample jurors got to Dowd's manner of questioning after he delivered an opening statement last week that took twice as long as the initial description of the evidence in the case presented by Assistant U.S. Attorney Jonathan Streeter.

Dowd, best known for preparing a report that led Pete Rose to accept a lifetime ban from baseball in 1989, opened his cross examination of Kumar by talking about securities fraud charges Kumar pleaded guilty to a year ago that could bring a prison term of up to 25 years.

"You might not go to jail at all, correct?" Dowd asked, dismissively.

"Yes," Kumar responded. He said he was truthful in everything he did in the case.

"It's important to make Mr. Streeter happy, correct?" Dowd asked.

"Wrong," Kumar immediately answered.

"And his goal is to convict Mr. Rajaratnam, correct?" the defense lawyer continued.

"Wrong," came the reply again.

Kumar is considered key to the government case against the 53-year-old Rajaratnam, who was charged along with more than two dozen other hedge fund employees and workers for public companies. The government has said Rajaratnam's illegal profits may have topped $50 million while Dowd has maintained that Rajaratnam only made trades based on information that was already public. After his arrest, Kumar quickly cooperated, which gave Dowd another line of attack that he did not pass up.

"When you got caught, you pinned it all on Raj didn't you, 'cause that's what you needed to do to stay out of jail?" Dowd asked.

"`No," Kumar said.