A federal jury heard the lone recorded phone call of an ex-Goldman Sachs board member speaking with a billionaire hedge fund founder Wednesday as the government laid a foundation for its insider trading case.
The friendly 24-minute conversation on July 29, 2008 came a month and a half before prosecutors say Rajat Gupta telephoned Raj Rajaratnam seconds after learning that Warren Buffet was investing $5 billion in Goldman at the height of the financial crisis that shook Wall Street.
On the call, Gupta told Rajaratnam there was a "big discussion" at a Goldman board meeting about whether the financial firm should buy a commercial bank. He said the board was divided on the subject.
Gupta also on the call seems to be seeking a role with Rajaratnam's Galleon Group hedge funds, saying: "By the way, on that I want you to keep, us to keep having the dialogue as to what ... you know, how I can be helpful in Galleon International. By the way not Galleon International, Galleon Group."
The call was played on the third day of the trial of Gupta, a Westport, Conn., man who sat on the boards of Goldman and Procter & Gamble during a two-year period when prosecutors say he shared secrets with Rajaratnam. The Sri Lanka-born Rajaratnam was convicted at trial last year and is serving an 11-year prison sentence.
As the call was played throughout the packed Manhattan courtroom, Gupta read the transcript along with one of his lawyers, at least once looking up at jurors who were reading along with a transcript.
The government contends the tape shows the relationship between Gupta and Rajaratnam and how easily Gupta shared information about the board. Gupta's lawyers argue that everything their client discusses on the call was already publically spoken about by top Goldman executives. They say Gupta's relationship with Rajaratnam had soured significantly by September 2008 as he lost $10 million in a shared investment with Rajaratnam.
Earlier in the day, former Goldman partner Byron Trott told jurors that he arranged the $5 billion deal in September 2008 with Buffett because he knew him well from previous deals.
He told a prosecutor that the deal was arranged in a single day and was "very" confidential, "about as top secret as you could get."
He said Buffett was one of the few people in the world who could arrange something so quickly and he noted that he was able to reach him as necessary throughout the day except for one stretch when Buffett said he was not to be disturbed while he took his grandchildren to a Dairy Queen ice cream shop.
One of the more colorful bits of testimony Wednesday was elicited when Ananth Muniyappa, who worked at Galleon in September 2008, was asked what caused him to think one of his colleagues was angry that he didn't know about the Buffett investment before it was publically announced.
"Hair all over the place, red face, eyes popping out," Muniyappa said.
The cordial behavior between prosecutors and defense lawyers in the courtroom dissolved outside of the jury's presence as they argued about evidence.