Rajat Gupta trial day 15: The defence rests

On Day 15, Geetanjali Gupta told the jury that she would do "anything' to help her father, Rajat Gupta, former global head of McKinsey & Co., who is standing trial for insider trading .

"Would you do what you could to help your father," Assistant US Attorney Reed Brodsky gently asked Geetanjali who appeared as a defence witness on Tuesday. "I would do anything to help him but I would not lie though," she replied.



Gupta has been accused of passing on confidential information about Goldman Sachs Group Inc. and Procter & Gamble Co., while serving as director, to Raj Rajaratnam, co- founder of the Galleon Hedge Fund LLP. Rajaratnam, convicted of insider trading last year, is serving an 11 year prison term.                  

The defence counsel, however, is trying to establish that the two men had a falling out in 2008 after Gupta lost $10 million invested in their joint-fund Voyager Capital Partners Ltd.  

Geetanjali was called as a witness to talk about Gupta's distress over the Voyager Fund. The judge warned the jury that her testimony should be heard not as a representation of fact about the fund but only as a description of her father's demeanour at the time.

Geetanjali, 33, described how they talked about the fund in the library of their family home in Westport, Connecticut on September 20, 2008. "He was upset. He was stressed," she said, adding that her father walked about and ran his hand through his hair. "He is usually a calm and collected person," she told the jury.


The date is significant because the prosecution is trying to establish that Gupta called Rajaratnam minutes after a Goldman Sachs board meeting on September 23, 2008 to tell him that Warren Buffett's Berkshire Hathaway Inc. was going to inject $5 billion in the investment bank. A few minutes before the market closed that day, Rajaratnam bought more than 200,000 Goldman Sachs shares.

The defence counsel's strategy is to show that it's not likely for Gupta to have passed secrets to Rajaratnam, whom he blamed for his financial loss. The witness also showed an October 2008 email from daughter to father, which reads, "How bad are things w/the Raj fund?"

At this point, Judge Jed Rakoff inquired whether "Baba" was "papa" in "Indian," causing the courtroom to smile.

 The date is relevant because Gupta allegedly phoned Rajaratnam 23 seconds after an October 23, 2008 board meeting to tell him that the investment bank would report a fourth quarterly loss.

 Geetanjali, who works for the Harvard Management Company, which manages the university's money, also testified that she discussed the Voyager Fund with her father on Thanksgiving in 2008. "My father was not his usual self," she said, describing him as "depressed and withdrawn about it".

Last week, government witness and former McKinsey senior partner Anil Kumar, when questioned by defence lawyer Gary Naftalis, said that Gupta later found out that Rajaratnam had not only mismanaged but also taken out money from the Voyager Fund. Kumar said that Gupta was considering suing Rajaratnam. Kumar has previously pleaded guilty to passing insider tips to Rajaratnam.

 Gupta's legal team also played a wiretapped conversation in which Rajaratnam appears to tell another Galleon employee Sanjay Santhanam that he took money out of the fund, "I'm a big boy. I hope Rajat is a big boy." He also says, "I didn't tell him (Gupta) that I took the equity out, right," he said.

While the prosecution was unable to extensively cross-examine the witness, Brodsky asked her, "Do you love your father?" Unlike his usual forceful style, Brodsky stood away from the mike while posing the question quietly.  "Yes, I do," she replied. The US government lawyers were indicating to the jury that Geetanjali had a motive of protecting her father.

The defence counsel also called Todd Summers, an executive from the Global Fund to Fight AIDS, Tuberculosis & Malaria, as a character witness. "I think Rajat is an honest and honourable man," he said. On cross-examination, Brodsky asked Summers about Galleon. "I don't even know what it is," he responded.

Gupta's counsel also called as a witness James Roth, a Goldman Sachs employee, who worked in the client relations group from 2007 to 2008. Roth, who had made preparations for a meeting on July 31, 2008 between the Goldman Sachs President Gary Cohn and Rajaratnam, was brought in by the defence counsel to show that the investment bank considered Galleon to be an important client.

In a July 29, 2008 conversation with Gupta, Rajaratnam mentions this meeting with Cohn. The US government accuses Gupta of passing confidential information during that conversation in which Rajaratnam says, "And there's a rumour, that Goldman might look to buy a commercial bank." He continues, "Have you heard anything along that line?"

Gupta responds, "Yeah, this was a big discussion at the board meeting." He also confirms to Rajaratnam, "Even AIG (American International Group, Inc-insurance company) yeah."

The defence counsel has argued that Gupta, during this conversation, was doing his job as a director by trying eliminating any concerns Rajaratnam might have had about Goldman Sachs.

Gupta's team rested its case on Tuesday. Both sides are expected to make closing arguments on Wednesday before the jury begins its deliberations. "Our job will be done, your job will be starting," Judge Rakoff told the 12 members of the jury.