By William Alden and Azam Ahmed of The New York Times
June 15, 2012
The jury for the insider trading trial of Rajat K. Gupta took only two days to reach its verdict. But the process was not easy, with several jurors saying they felt conflicted.
After fewer than 10 hours of deliberations, the jury found Mr. Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, guilty on one count of conspiracy and three counts of securities fraud. The verdict capped a swift fall from grace for Mr. Gupta, the most prominent business executive to be snared in the government’s crackdown on insider trading.
Mr. Gupta, a native of Kolkata, India, who went to Harvard Business School on a scholarship after being orphaned as a teenager, elicited sympathy from several members of the jury. To the jury’s foreman, Rich Lepkowski, an executive for a nonprofit organization, Mr. Gupta was an example of the American dream, someone who had lived a “storybook life.”
“We looked at him and what he had done professionally,” said Mr. Lepkowski, of Ossining, N.Y., who turned 51 today. “We were hoping he would walk out of this courthouse.”
But the mounds of circumstantial evidence against Mr. Gupta proved too overwhelming to ignore, jurors said. Using phone records and trading logs, prosecutors convinced jurors that Mr. Gupta had leaked boardroom secrets to his former friend and business associate, the fallen hedge fund titan Raj Rajaratnam, who is currently serving an 11-year sentence for insider trading.
Prosecutors showed that on several occasions, Mr. Gupta had called Mr. Rajaratnam within minutes of participating in Goldman Sachs board meetings. The hedge fund manager then traded on secret information, later boasting on recorded calls that he had gotten a tip from someone on Goldman’s board.
“On the counts we convicted, we felt there was enough circumstantial evidence that any reasonable person could make that connection,” Mr. Lepkowski said.
Part of Mr. Gupta’s defense focused on his once-vaunted status in corporate circles. A man with Mr. Gupta’s credentials would not choose to violate the law in the seventh decade of his life, Mr. Naftalis argued.
Indeed, jurors struggled with the question of motive. Why would Mr. Gupta, a wealthy man by all accounts, choose to violate his corporate responsibilities by passing confidential information to Mr. Rajaratnam? What did he stand to gain?
The jury never actually heard from Mr. Gupta, whose family sat in the spectator’s gallery throughout the month long trial. Last week, Mr. Naftalis (whose son, Ben, is a prosecutor in the very office that convicted Mr. Gupta, and had clerked for the judge! But the Southern District of New York and others are such an honorable institution that no one would ever find this untoward– so much for “connections” that Latin American defendants favor so highly), said his client was “highly likely” to testify, but he later reversed course, declining to put him on the stand. To [the juror] that decision wasn’t consequential.
“It wouldn’t have mattered to me if he took the stand or not,” he said.
Commentary
What to make of it? First, Prosecutors bring charges they can win not just that they believe. They are not that sentimental. Secondly, they overlook nothing. What they don’t know they found out about. What they don’t understand, they learn about. If you would have thought of it, they would have thought of it first.
Secondly they do it with hard evidence: telephone logs, tape recordings, intercepted conversations, toll records, documents, evidence you cannot refute. When they do lose sometimes it is when they bring cases using witnesses with tarnished reputations like drug dealers or organized crime members. If that is all they have, they bring so many of these witnesses that the jury figures they must be telling the truth. There is strength in numbers. Bit it is still an uphill battle.
Motive? None. But it was considered. However weak a case is, if the defendant-husband did not do it, for example, then who? In drug and organized crimes cases motive to lie wreaks havoc on prosecutors. Cooperating witnesses always have a motive to lie and they are bad guys to boot! That is why prosecutors surround these fellows with mounds of irrefutable evidence.
Defendant not taking the stand.
“It wouldn’t have mattered to me if he took the stand or not,” said the juror. Why? Because jurors are told that a defendant never has to take the stand. Jurors obey. If a judge tells a jury its only mission is to decide whether the government has proven its case, jurors obey even if they think the defendant is guilty. If a judge tells a jury it must give the defendant the benefit of the doubt, jurors obey:
“We looked at him and what he had done professionally. We were hoping he would walk out of this courthouse.”
A hedge fund manager boasted “on recorded calls that he had gotten a tip from someone on Goldman’s board.”
Which goes to show however careful you may be you cannot prevent someone else from being careless. Often it is not what you say, but what others say about you.
Lots of lessons here for the uninitiated.
– David Zapp