NEW YORK, March 16 (Reuters) - A person at Goldman Sachs
Group Inc, who has not been identified or charged in a broad
U.S. insider-trading probe, was caught on a wiretap leaking
secrets about Intel Corp and Apple Inc, a lawyer for former
Goldman board member Rajat Gupta said in court on Friday.
Lawyer Gary Naftalis, in a heated exchange with U.S.
prosecutor Reed Brodsky during a pre-trial hearing, said the
Goldman person leaked confidential information about the two
companies to Raj Rajaratnam, the Galleon Group hedge fund
founder convicted of insider-trading charges last year.
Gupta, the best-known corporate executive accused in a
sweeping prosecution of insider-trading at hedge funds in recent
years, denies criminal charges that he tipped Rajaratnam with
Goldman Sachs and Procter & Gamble Co secrets between 2007 and
2009. His trial is scheduled to begin in May.
"In a letter he (Brodsky) said the government had a person
who provided confidential information to Raj Rajaratnam about
Apple and Intel," Naftalis said. "There is also wiretap
evidence, substantial evidence of another source at Goldman
Sachs."
Naftalis told U.S. District Judge Jed Rakoff that the
defense believed "there is a much more circumstantial case that
person should be sitting in the box rather than us" and "the
wrong man is on trial here."
A theme of Gupta's defense is that the charges brought by
U.S. prosecutors last October are circumstantial and that
Rajaratnam had a host of sources tipping him with information. A
jury convicted Rajaratnam largely on wiretaps, which
traditionally have been used in organized crime and narcotics
caes, not white-collar investigations.
Rajaratnam, once a friend of Gupta's, is serving an 11-year
prison sentence. Gupta was onetime global head of McKinsey & Co
and sat on the boards of several companies.
The judge ended the late afternoon hearing in Manhattan
federal court, but Brodsky and Naftalis continued to argue.
Brodsky declined to comment.
A Goldman Sachs spokesman, Michael DuVally, declined to
comment.
Goldman has been in the spotlight this week with the public
resignation of employee Greg Smith, who said in a New York Times
op-ed that Goldman had become "as toxic and destructive as I
have ever seen it" and was a place he no longer wished to work.
A person familiar with the Gupta case said in early March
that prosecutors are investigating David Loeb, a managing
director of Goldman Sachs. Loeb works with technology hedge-fund
employees, including an Asia-based analyst, Henry King, who is
also under investigation, according to another source briefed on
the case.
The sources declined to be identified because the matter is
not public. Neither Loeb nor King has been accused of any
wrongdoing and neither responded to emails asking for comment.
The insider-trading case has drawn in Goldman Sachs Chief
Executive Lloyd Blankfein, who was interviewed under oath on
Feb. 24 as a witness, according to court documents.
Blankfein testified for the government at Rajaratnam's
trial. He is also expected to be called as a witness by the
government at Gupta's trial.
The case is USA v Gupta, U.S. District Court for the
Southern District of New York, No. 11-907.
For the prosecution: Preet Bharara, U.S. Attorney.
For Gupta: Gary Naftalis of Kramer Levin Naftalis & Frankel.
(Reporting by Grant McCool)
Follow us on Twitter: @ReutersLegal