The jury at the insider-trading trial of a wealthy hedge fund founder listened Thursday to giggle-laced audio tapes of phone conversations that demonstrated his playful relationship with a then-top Intel Corp. executive who admits giving him lucrative secrets.
"My kids are making fun of me the way I talk to you," ex-Intel executive Rajiv Goel is heard saying in a taped conversation on March 20, 2008.
"What?" responds Raj Rajaratnam, a then-billion-dollar hedge fund founder who commanded respect on Wall Street and from friends including Goel, who was privy to the chipmaker's strategic plans as its director of strategic investments at Intel Capital, its investment arm.
Goel escaped the laughs of his children by walking outside to continue his conversation with Rajaratnam. This time, only Goel's laughs are heard.
"They are laughing at the way I talk to you because I talk slo- ... slo- ... softly," Goel is heard saying through chuckles to Rajaratnam, whom he met in the early 1980s when they were students at the University of Pennsylvania's prestigious Wharton School.
Then, Goel got right to business, saying "So, did you, uh ... digest the information I gave you?"
And the pair launched a conversation about Intel's investment plans for a wireless venture involving a wireless company, Clearwire, and various other companies.
To prosecutors, the conversations are more evidence in a case they are building against Rajaratnam, who built the Galleon Group into a nearly $7 billion hedge fund before his October 2009 arrest on insider-trading charges forced its demise. Goel, also arrested in 2009, has pleaded guilty in a cooperation deal aimed at sentencing leniency.
Prosecutors say Rajaratnam, who was born in Sri Lanka, made more than $50 million through illegal trades based on secrets he gleaned from others in the hedge fund business and insiders at public companies. Nineteen of the more than two dozen people arrested in the largest insider-trading case ever brought in the hedge fund industry have pleaded guilty.
Rajaratnam's lawyers say he never traded on information that was not already public.
The government introduced another taped conversation in which Goel fawns over Rajaratnam, saying things like, "I just called to say you're a good man."
Then Goel can be heard chuckling as he adds: "I mean, you know, I don't know of too many people like you."
It wasn't all laughs in the courtroom Thursday, though. Prosecutors also played taped conversations between Rajaratnam and his younger brother, Rengan Rajaratnam, who worked at Galleon before running his own fund. The younger brother has not been charged with any crimes.
In one conversation, Rengan Rajaratnam is heard cursing as he describes seeing information about Clearwire published in The Wall Street Journal.
"They're short on details, but they kind of say, you know, they're looking to raise as much as 3 billion, but they don't have any of the equity split," Rengan Rajaratnam is heard saying.
In testimony, prosecutors asked Goel if the information he told Raj Rajaratnam about Clearwire was confidential.
"It was confidential information, sir," he answered.
On cross-examination, Goel was asked if he talked about 100 times a year with Rajaratnam and if Rajaratnam vacationed with him twice and gave him money toward a home down payment.
"He helped me," Goel said.
About his conversations, he said: "I would talk very freely with him."
But he spoke of the friendship in the past tense when he was asked if Rajaratnam was a good friend.
"At that time, yes, sir, he was," Goel said.