Former Goldman Sachs board member Rajat Gupta lived the American Dream before being led astray by a wealthy friend who was a master at insider trading.
That was the view of two jurors who on Friday voted with 10 others to convict Gupta of three counts of securities fraud and one count of conspiracy for sharing corporate secrets with hedge fund manager Raj Rajaratnam.
With the verdict, Gupta became the most prominent defendant convicted so far in a wide-ranging Wall Street inquiry conducted by investigators armed with wiretaps.
Prosecutors had alleged that Gupta's tips gave Rajaratnam an edge over ordinary investors on trades of more than 350,000 shares of Goldman stock in 2008.
Rajaratnam, the billionaire founder of the Galleon hedge fund firm who was convicted last year, "was a very manipulative man," juror Rick Lebkowski said after the verdict. "He made it very easy for Mr. Gupta to give him this information."
Recordings of Rajaratnam and Gupta casually chatting on the phone convinced juror Ronnie Sesso that Rajaratnam "was a savvy and sneaky man. ... He was a little snake in the grass."
Gupta _ born in India, educated at Harvard and well-respected on Wall Street _ was "a wonderful example of the American Dream," Lebkowski said. "I wanted to believe the allegations weren't true." But on the counts the jury found Gupta guilty, "the evidence was overwhelming," he added.
The jury reached a not-guilty verdict on two other securities fraud counts after less than two days of deliberations at the insider trading trial in federal court in Manhattan.
In a statement, FBI Assistant Director Janice K. Fedarcyk called the conviction "the latest milestone in an FBI initiative undertaken in 2007 to zero in on illegal conduct in the hedge fund industry."
Added Fedarcyk: "Rajat Gupta broke the law, plain and simple."
Gupta, 63, of Westport, Conn., left the courthouse on Friday without speaking to reporters. He had sat motionless while the verdict was read, but his adult daughters could be heard weeping. As the courtroom emptied, they hugged their father.
Defense attorney Gary Naftalis called the outcome a disappointment.
"We believe the facts of this case demonstrate that Mr. Gupta is innocent," he said. "He always acted with honesty and integrity."
Allegations that Gupta conspired with a convicted white-collar criminal represented a fall from grace: The defendant is a former chief of the global consulting firm McKinsey & Co. and a onetime director of the huge consumer products company Procter & Gamble Co. He also won admirers, including author and spiritual leader Deepak Chopra, with his philanthropy.
Gupta's stellar reputation began to unravel at last year's trial of Rajaratnam, when Goldman Sachs chairman Lloyd Blankfein testified that Gupta appeared to have violated the investment bank's confidentiality policies. Less than a month after Rajaratnam was sentenced to 11 years in prison, Gupta was charged in a separate case built on the some of the same wiretap and other evidence.
During the trial that began on May 20, the government again highlighted a Sept. 23, 2008, phone call it said was made from Gupta to Rajaratnam. The call came only minutes after Gupta had learned during a confidential conference call about how Warren Buffett's Berkshire Hathaway planned to invest $5 billion in Goldman _ a blockbuster deal that wouldn't be announced until the stock market closed at 4 p.m.
"That news was going to be very good news for Goldman Sachs," prosecutor Richard Tarlowe said in closing arguments. "The average ordinary investor had no way of knowing that. ... Until the announcement, it was confidential."
Records showed that moments after the phone call ended at 3:55 p.m., Rajaratnam purchased $40 million in Goldman stock _ an 11th hour trade that ended up making him nearly $1 million.
The hedge fund manager's assistant, Caryn Eisenberg, testified at trial that it was the only call her boss received on his private line that day between 3 p.m. and 4 p.m.
"That evidence is devastating for the defendant. ... If you believe Ms. Eisenberg, it's over _ the defendant is guilty," Tarlowe said.
Also played at trial was a wiretap of a July 2008 phone call during which Rajaratnam grilled Gupta about whether the Goldman Sachs board had discussed acquiring a struggling bank, like Wachovia, or an insurance company.
"Have you heard anything along that line?" Rajaratnam asked Gupta.
"Yeah," Gupta responded. "This was a big discussion at the board meeting."
In another recorded phone call in 2008, Rajaratnam told one of his traders that he had got a tip "from someone who's on the board of Goldman Sachs" that Goldman was facing an unexpected quarterly loss.
Prosecutors argued the sequence of events _ the phone calls, the subsequent trades and Rajaratnam's boasting about his inside connection _ could not be dismissed as mere coincidence. Gupta, they said, was motivated to help Rajaratnam because he had a financial stake in some of the hedge fund manager's business ventures.
"What was good for Raj Rajaratnam was good for Mr. Gupta," said another prosecutor, Reed Brodsky.
Naftalis countered that most the evidence was specific to the "secret world" of Rajaratnam that had nothing to do with Gupta.
"I sometimes wondered whether Raj Rajaratnam was the man on trial," he said. His client, he added, was a victim of "pure guilt by association."
The most serious charge against Gupta, securities fraud, carries a maximum term of 20 years. Sentencing was set for Oct. 18.