By Jonathan Stempel and Grant McCool
NEW YORK (Reuters) - Raj Rajaratnam's lawyer took his last shot at keeping his client out of prison, blasting the credibility of key witnesses and telling jurors on Thursday the government failed to prove the hedge fund manager broke insider-trading laws.
In his closing argument, chief defense lawyer John Dowd also fired back at the prosecution's contention that Rajaratnam had corrupted his friends and colleagues. He said it was the people who testified against the Galleon Group founder who were corrupt or had lied.
Mostly reading from a lectern, with an unemotional Rajaratnam sitting five feet behind him, Dowd presented dozens of e-mails, trading records and excerpts from trial testimony to argue that Rajaratnam made trades based on public reports, not on tips about nonpublic information.
"The government can't make all the public information disappear," Dowd quietly told jurors in a full Manhattan federal courtroom. "They can only hope you ignore it."
Rajaratnam, 53, is the central figure in a sweeping government probe of insider trading at hedge funds. Nineteen out of 26 people charged have pleaded guilty in the biggest Wall Street insider-trading prosecution since the 1980s.
Dowd's deliberate delivery contrasted with Assistant U.S. Attorney Reed Brodsky's animated summation on Wednesday, when he reminded the jury of dozens of phone wiretaps they had heard. Brodsky said they showed Rajaratnam "committing his crimes time and time again in his own words."
Brodsky said Rajaratnam got an unfair advantage over honest investors by "corrupting his friends and his employees."
If found guilty of securities fraud and conspiracy, Rajaratnam could go to prison for up to 25 years.
To convict Rajaratnam, the government's evidence must convince jurors beyond a reasonable doubt that he received material non-public information from people who had a duty not to disclose it, and that he knew it was wrong to trade on it.
The trial began on March 8 and jurors are likely to begin deliberations on Monday. A prosecutor was to rebut the defense closing later on Thursday. There is no court session on Friday because of the Good Friday holiday.
WITNESS CREDIBILITY AT ISSUE
Dowd told jurors not to trust testimony by three men who pleaded guilty to criminal charges and testified at the trial, hoping to win lighter sentences: former McKinsey & Co consultancy partner Anil Kumar, former Intel Corp executive Rajiv Goel, and former Galleon portfolio manager Adam Smith.
Dowd said that during cross-examination Kumar had acknowledged dodging taxes, while Smith changed his story.
"Kumar and Smith were caught in their own lies, and all the documents and all of the research just don't lie," Dowd said.
Later, he called Goel's performance under cross-examination "hostile, uncooperative and downright bizarre," but said he is getting a "free pass."
Rajaratnam is also charged with receiving confidential information about Goldman Sachs Group Inc, Wall Street's most influential bank, from former director Rajat Gupta.
Gupta's lawyers were expected to face off against the U.S. Securities and Exchange Commission in the same courthouse later on Thursday. Gupta countersued the market regulator on grounds it was denying him a right to a jury trial after it filed civil charges against him. He has not been criminally charged.
Dowd focused on chipmaker Advanced Micro Devices Inc's $5.4 billion purchase of graphics chipmaker ATI Technologies Inc in July 2006, and what he called the many earlier reports speculating on a possible merger.
Prosecutors accused Rajaratnam of making $22.9 million on ATI stock, the single biggest amount in the $63.8 million they said he made illegally between 2003 and March 2009.
Citing a sale of 250,000 ATI shares in early 2006, Dowd questioned why Rajaratnam would sell rather than buy stock of a company he thought would be acquired. "What you would do is back the truck up, wouldn't you?" he said.
Dowd also said prosecutors were wrong about what Rajaratnam meant in telling friends and colleagues like Danielle Chiesi, who also pleaded guilty and who prosecutors said provided inside tips to Rajaratnam, to be "radio silent."
This, Dowd said, was not a signal to keep illicit tips quiet, but a request not to reveal his trading activity. Rajaratnam, like other big investors, did not want anyone "to blab his position all over Wall Street."
The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.
(Reporting by Grant McCool and Jonathan Stempel; Editing by Martha Graybow, Ted Kerr, Dave Zimmerman)
