2nd UPDATE: Goffer Lawyer Argues Government Misused Wiretap
02 6월 2010 - 5:31AM
Dow Jones News
The government exceeded regulations meant to protect individuals
from wiretaps in its Galleon Group insider trading investigation, a
lawyer for defendant Zvi Goffer argued in a court filing.
Cynthia Monaco, Goffer's lawyer, said that the government's use
of a wiretap in the case consistently didn't reveal the key
information needed to extend its use and that all but one of the
trades at issue in the case actually happened before the government
tap started.
She said discovery in the case has shown the government obtained
information that the alleged insider information Goffer and others
had was actually publicly available.
"Indeed, although touted as a case that exposed hedge fund
traders with an 'illegal edge,' the wiretap evidence obtained in
this case reveals traders with no edge at all," Monaco wrote.
"Equally egregious, the government made no effort to comply with
Title III's monitoring and minimization requirements, intercepting
scores of irrelevant and inappropriate calls."
Goffer, who worked for a time at Galleon and is the founder of
trading firm Incremental Capital, has been indicted for his alleged
involvement in the insider-trading scheme that's reached across
hedge funds, big corporations and well-known investors. Prosecutors
have alleged Galleon founder Raj Rajaratnam was at the center of
the scheme.
Goffer and Rajaratnam have denied wrongdoing.
Prosecutors from the U.S. Attorney's office in Manhattan allege
that Goffer and Jason Goldfarb, an associate at a New York law
firm, shared inside information with others regarding deals in
which law firm Ropes & Gray LLP, which employed neither man,
was acting as an adviser. Those deals included Bain Capital
Partners LLC's failed bid to acquire 3Com Corp. and Axcan Pharma
Inc.'s acquisition by TPG Capital.
Goldfarb's lawyer was also part of the filing, which was dated
Friday and requests the government be made to provide specific
information on the charges, known as a Bill of Particulars. The
lawyers said in order to prepare a defense they needed to know
"which of the thousands of 'tips' [the defendants] heard daily from
2006 to 2008, are alleged to have been, in fact, misappropriated
inside information."
Specifically, the lawyers said they needed more information
about a list of stocks that prosecutors said they will introduce as
evidence but have not been filed as part of the charges.
The filing said those stocks, some of which have been involved
in mergers and acquisitions, were P.F. Chang's China Bistro Inc.
(PFCB), Clear Channel Communications Inc., ATI Technologies Inc.,
Advanced Micro Devices Inc. (AMD), Alliance Data Systems Corp.
(ADS), Avaya Inc. (X-AV), Alexion Pharmaceuticals Inc. (ALXN) and
NuSkin Enterprises Inc., Allied Waste Industries Inc., Cadbury
Schweppes PLC and inVentive Health Inc. (VTIV).
The filing also said that the government has alleged Goffer
provided Rajaratnam with material non-public information on PF
Chang's and Clear Channel Communications, but has not given over
the wiretaps that would provide "crucial evidence" on the charges.
The filing also said that Goffer and other Galleon traders "lost
many millions of dollars" on PF Chang's and Clear Channel which
would suggest the information was "far from material."
PF Chang's declined to comment. Clear Channel couldn't
immediately be reached.
The lawyers for the defendants also argued Tuesday that "in many
instances the defendants were downstream tippees by multiple
levels, rendering it next to impossible to prove knowledge of the
source of the information in question."
The defendants say they will file an "extensive" set of pretrial
motions "addressing the deficiencies in the indictment and the
investigation."
-By David Benoit, Dow Jones Newswires; 212-227-2017;
david.benoit@dowjones.com
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