A wealthy Manhattan hedge fund manager advised a financial consultant to set up an offshore bank account to deposit exorbitant payments the consultant was receiving in exchange for sharing technology industry secrets, the consultant testified Wednesday.
Raj Rajaratnam, who is charged with paying for the illicit tips, "seemed to have more knowledge on how to do these things than I did," Anil Kumar told a jury at Rajaratnam's insider trading trial.
The testimony came on Kumar's fourth day on the witness stand in federal court, where he's considered a key to what prosecutors call the largest hedge fund insider trading case ever.
Rajaratnam, 53, was charged along with more than two dozen other hedge fund employees and workers for public companies. Nineteen, including Kumar, have pleaded guilty.
The government alleges Rajaratnam's illegal profits may have topped $50 million while defense John Dowd has maintained that his client only made trades based on information that was already public.
Dowd confronted Kumar on cross-examination Wednesday with financial news reports he said showed that all the information Kumar shared was common knowledge. Kumar called the reports "speculative" and claimed he offered Rajaratnam "more accurate facts than a journalist would."
He testified that Rajaratnam was paying him $500,000 a year for his "insight." Some of the money was hidden in an offshore bank account opened under the name of Kumar's housekeeper.
Kumar and Rajaratnam 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 testifies honestly about his arrangement with Rajaratnam, the Galleon Group founder and one-time billionaire whose family of hedge funds was forced to shut down after his October 2009 arrest.
The defense has sought to portray Kumar as a witness willing to say anything to win his freedom.