Galleon fraud probe ensnares 14 more
FOURTEEN people were charged with fraud and conspiracy in a dramatic widening of the Galleon insider trading scandal in the US that has ensnared hedge fund managers, top Silicon Valley executives and a number of senior advisers.
In complaints that read like scripts for the TV series “The Sopranos,” investigators alleged suspects dropped off bags full of cash, used prepaid cellphones to dodge wiretaps, and used nicknames such as “the Greek” and “the Octopussy”.
“Some of the defendants – taking a page from the drug dealer’s playbook – deliberately used anonymous, hard-to-trace, prepaid cellphones in order to avoid detection,” US Attorney Preet Bharara said yesterday.
Federal prosecutors have alleged $40m of insider trading profits from their investigation so far. The Securities and Exchange Commission has alleged $53m of illegal profits in its own civil investigation.
Raj Rajaratnam, Galleon’s billionaire founder, is accused of masterminding a ring which secretly passed market moving information between his dealers and outside company executives. US regulators then say the Galleon hedge fund made trades on this privileged information. Rajaratnam denies all charges.
In the largest branch of the investigation, Zvi Goffer, manager of New York-based trading firm Incremental Capital, was accused of leading an insider trading ring that netted $11m.
Among those arrested were Ropes & Gray lawyer Arthur Cutillo; Craig Drimal, who worked in Galleon’s office; Jason Goldfarb, also a lawyer; and David Plate, both also associated with Incremental Capital.