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Insider Trading Trial Enters 4th and (Possibly) Final Week

Monday, June 11, 2012

Rajat Kumar Gupta, former Goldman Sachs board member, leaves a Manhattan court after surrendering to federal authorities October 26, 2011. (Spencer Platt/Getty Images)

During jury selection in the insider trading trial of Rajat Gupta, Judge Jed Rakoff refused to dismiss potential jurors who had unbreakable appointments after June 15.

As a "worst case" scenario, he said the jury would return a verdict by June 15. "Rely on it," Rakoff said.

But that deadline may be in doubt. The defense has only started calling its own witnesses at the end of the third week of the trial.

One person the defense won’t be calling to the stand is the defendant himself.

On Sunday, Gupta’s attorney wrote Judge Rakoff to say Gupta would not take the stand. “We have spent the last day reviewing what we believe we need to present in the defense case,” Gary Naftalis wrote. “ After substantial reflection and consideration, we have determined that Mr. Gupta will not be a witness on his own behalf in the defense case.”

Just two days earlier, Naftalis revealed in court that Gupta would likely testify.

Gupta has the right under the Fifth Amendment to not speak at his own trial. It would be a fairly unusual move if he decided to do so, opening him up to a tough-cross examination by prosecutors.

It will in any case be hard to keep to Judge Rakoff’s promise of a verdict by Friday.

Last week, he said he expected the last defense witnesses to testify on Tuesday.

Judge Rakoff has expressed exasperation with the slowness of the proceeding, which will decide whether Gupta is guilty of passing confidential corporate secrets to a hedge fund manager.

Part of the problem is the volume of evidence: the government’s case relies on copious phone logs and records of stock trades.

But the opposing legal teams have frequently raised objections to each other's questioning of witnesses and requested conferences with the judge, known as sidebars, outside of earshot of the jury.

Last week, prosecutors sought to bar Barry Bloom, Harvard professor and a character witness for Gupta, from giving his assessment of the defendant's integrity.

On hearing the motion, Judge Rakoff reached for his dictionary, determined the definition of “integrity” in common usage had drifted from its original meaning of "whole or complete," and upheld the objection. He limited Bloom to an assessment of Gupta's honesty. (Bloom, indeed found him honest in the work the two men did to establish public health schools in India.)

Bloom's relatively short time in the witness box was prolonged by the defense team, which raised an objection to prosecutors' cross-examination of him.

Upon hearing this, Judge Rakoff turned to the jury, and said, "ladies and gentlemen, I assume you have a bet going as to how long it'll be before a sidebar," and then admonished them that "gambling is not a good thing."

The sidebar that followed was not brief.

Gupta is fighting not only to stay out of jail, but also to salvage his reputation. A former board member of Goldman Sachs and Procter & Gamble, Gupta also led McKinsey, the consulting firm, in the 1990s. He has a reputation as a generous philanthropist, particularly in his native India, where he co-founded the Indian School of Business.

He has pleaded not guilty to one count of conspiracy and five counts of securities fraud. If convicted on all charges, he could face as much as 25 years in prison.

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