A federal appeals court will hear oral arguments on October 25 in hedge fund founder Raj Rajaratnam's bid to overturn his insider trading conviction on grounds that the U.S. government improperly won permission to record his phone conversations.
One-time billionaire Rajaratnam, 55, is serving an 11-year prison sentence in what prosecutors called the biggest-insider trading case of a generation. Rajaratnam was the principal defendant among dozens of money managers, traders, consultants and lawyers caught up in a crackdown in the past four years of trading on company secrets.
A panel of three judges on the 2nd U.S. Circuit Court of Appeals in New York will allow prosecutors and Rajaratnam's lawyers 15 minutes each to make their arguments, according to the court's calendar.
Rajaratnam was convicted in May 2011 by a Manhattan federal court jury on all 14 counts he faced, largely based on FBI wiretaps. Rajaratnam lost a bid in November 2010 to suppress the wiretaps before his trial.
Rajaratnam's lawyers contend that when the FBI applied to a federal judge to tap his cell phone in March 2008, the affidavit did not provide the judge with all of the information required for approval under the law.
One fact omitted was that a government informant, Roomy Khan, had been convicted of wire fraud in the late 1990s after providing Rajaratnam with inside information.
"The government argues that this Court must close its mind to the truth and accept its pervasively misleading affidavit at face value because it was not 'outright false'; it was just filled with intentionally misleading 'omissions,'" lawyers at Akin Gump Strauss Hauer & Feld, who represent Rajaratnam, said in papers filed in the appeal.
Federal prosecutors, in their brief to the appeals court, noted that six judges approved the wiretaps of Rajaratnam between March 2008 and November 2008.
"The issuing judges' findings were validated by the wiretap investigation, which uncovered highly incriminating evidence of wide-ranging insider trading schemes involving Rajaratnam and others," the government brief said.
The case is USA v Rajaratnam in the 2nd U.S. Circuit Court of Appeals, No. 11-4416
(Reporting By Grant McCool; Editing by Martha Graybow and Richard Chang)