The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund (53 page)

The FBI agents manning the wire from 6 a.m. until midnight:
US v. Rajaratnam
, Testimony of FBI special agent Diane Wehner, March 10, 2011.

Trading corporate secrets was “like an orgasm”:
James Bandler and Doris Burke, “Dangerous Liaisons at IBM,”
Fortune
, July 26, 2010.

Conversation between Rajaratnam and Chiesi on July 24:
US v. Rajaratnam
, Government Exhibit 532-T, Transcript of a wiretapped conversation between Rajaratnam and Chiesi, July 24, 2008.

Within Akamai, the betting was that the stock would drop to $25:
Ibid.

The conversation between Chiesi and Rajaratnam on Akamai:
Ibid.

Galleon diversified fund returns:
US v. Gupta
, Government Exhibit 1853, Galleon April 2008 investment presentation attached to email from Ayad Alhadi to Fernando Lamas at UBS, April 18, 2008.

In February, Rajaratnam hired Alhadi:
US v. Gupta
, Testimony of Ayad Alhadi, May 31, 2012.

The Sberbank board position paid $525,000 in 2008:
Duff McDonald, “Rajat Gupta: Touched by Scandal,”
Fortune
, October 1, 2010.

In 2004, the Bill and Melinda Gates Foundation gave $47 million for AIDS in India:
“Bill and Melinda Gates Foundation’s Avahan Initiative Announces $47 Million in Grants to Combat HIV/AIDS in India,” press release, March 16, 2004, http://www.gatesfoundation.org/press-releases/Pages/grants-to-combat-hiv-aids-in-india-040316.aspx.

In March, Gupta joined Alhadi for meetings in the Middle East with investors like the Abu Dhabi Investment Council:
US v. Gupta
, Alhadi testimony; Government Exhibit 1824, Email from Alhadi to Gupta with schedule of Middle East trip as of March 31, 2008.

In late April, the Abu Dhabi Investment Council said it would invest $50 million:
US v. Gupta
, Government Exhibit 1857, Email from Alhadi to Gupta, April 28, 2008.

Larry Currie asked for a meeting with Gupta and said the National Commercial Bank would start with a $25 to $30 million investment:
US v. Gupta
, Alhadi testimony; Government Exhibit 1844, Email from Ayad Alhadi to Rajat Gupta, April 8, 2008; Government Exhibit 1856, Email from Alhadi to Gupta, April 25, 2008.

Alhadi suspected Gupta’s Goldman link would help National Commercial Bank
gain more comfort with Galleon:
US v. Gupta
, Government Exhibit 1852, Email from Alhadi to Gupta on April 17, 2008, where he says Currie enjoyed meeting Gupta and “I believe that meeting helped accelerate his comfort level with Galleon.”

He now spoke of raising $600 million for a telecommunications fund:
US v. Gupta
, Testimony of Anil Kumar, June 1, 2012.

“It’s now reached a point where it’s physically”:
US v. Rajaratnam
, Government Exhibit 522-T, Transcript of a wiretapped conversation between Kumar and Rajaratnam, May 28, 2008.

Gupta’s discussions with KKR and Goldman’s reaction to them:
US v. Gupta
, Testimony of Lloyd Blankfein, June 4, 2012.

The issue came to a head in Beijing:
Letter written by Anita Gupta on behalf of her husband ahead of his sentencing.

Gupta’s expected $5 million salary at KKR:
US v. Rajaratnam
, Government Exhibit 553-T-K, Transcript of wiretapped conversation on August 15, 2008, between Rajaratnam and Kumar where Rajaratnam says the KKR position would pay “about five million a year, with upside.”
US v. Gupta
, Blankfein testimony, June 4, 2012.

It was Gupta’s desire to be in the “billionaire [
sic
] circle”:
Ibid.

Schwarzman’s contributions to the New York Public Library and its name change:
Robin Pogrebin, “A $100 Million Donation to the New York Public Library,”
New York Times,
March 11, 2008.

Rajaratnam telling Gupta to take KKR in a “heartbeat”:
US v. Rajaratnam
, Government Exhibit 534-T-R, Transcript of a wiretapped conversation between Rajaratnam and Gupta, July 29, 2008.

“He’ll divide his week into a hundred different parts” and following conversation with Kumar:
US v. Rajaratnam
, Government Exhibit 522-T.

Rajaratnam was mulling giving Gupta a 10 percent stake in Galleon International, but Gupta was angling for more:
Rajaratnam’s version of his negotiations with Gupta is supported by at least one other person who knows the two men.

On Wednesday, July 30, Akamai unveiled a pessimistic outlook:
US v. Rajaratnam
, Government Exhibit 2562, Akamai Technologies Inc. Earnings Conference Call, Thomson StreetEvents, July 30, 2008.

Akamai’s stock fell 7.91, or 25 percent, to $23.34:
Interactive Data via FactSet Systems.

Rajaratnam shorted 200,000 shares of Akamai, then another 375,000 shares and bought put options:
US v. Rajaratnam
, Government Exhibit 41, All Trading by Manager Code “Tam” in Akamai Securities from July 25, 2008, to July 30, 2008.

Instant-message exchange between Rajaratnam and Joe Liu:
US v. Rajaratnam
, Government Exhibits 2611 and 2612, copies of instant-message exchange between Liu and Rajaratnam, July 30, 2008.

Rajaratnam made $5,139,851 from the Akamai trade:
US v. Rajaratnam
, Government Exhibit 44, Government’s calculation of Galleon Technology fund’s profits from trades in Akamai Securities starting on July 25, 2008.

Chiesi’s New Castle funds netted $2,437,976:
US v. Rajaratnam
, Government Exhibit 45, Government’s calculation of New Castle’s profit from trades in Akamai starting on July 25, 2008.

“I just wanted to say thank you,” and subsequent conversation between the two:
US v. Rajaratnam
, Government 543-T, Transcript of a wiretapped conversation between Rajaratnam and Chiesi, July 30, 2008, at 5:30 p.m.

That evening, she headed to the Chinese consulate:
Ibid.

“Raj?” said the cheerful voice:
US v. Gupta
, Government Exhibit 534-T-R, Transcript of a wiretapped call between Rajaratnam and Gupta, July, 29, 2008.

The description of Gomes and her views about Rajat:
Interviews with secretaries who dealt with her.

It was early in the evening of Tuesday, July 29, 2008:
US v. Gupta
, Government Exhibit 534-T-R.

Rajaratnam, who was working from Connecticut:
Ibid.

That coming Thursday at noon, he was going to be lunching with Gary Cohn:
Ibid.

Rick Schutte was to join the lunch, as were a number of Goldman executives:
US v. Rajaratnam
, Testimony of Richard Schutte, April 12, 2011.

In 2008 Galleon shelled out as much as $35 million in commissions and other fees to Goldman:
Ibid.

Goldman was Galleon’s largest trading partner, and the hedge fund funneled the biggest volume of its transactions through Goldman:
Ibid.

One of the reasons Cohn was coming to Galleon that day:
Ibid.

Goldman had about $600 million of Galleon (investor) assets in custody:
Ibid.

Galleon had about $200 million of investor assets at Bear:
Ibid.

Had Bear been forced to file for bankruptcy protection, Galleon would have been one company in a long line of creditors:
Ibid.

Rajaratnam had heard that Goldman might be shopping for a commercial bank and subsequent conversation between him and Gupta:
US v. Rajaratnam
, Government Exhibit 534-T-R.

Just a month earlier, Goldman’s twelve-person board of directors was in St. Petersburg:
US v. Gupta
, Blankfein testimony, June 4, 2012.

Gupta’s corporate board seats and the $3.2 million he earned from them:
Duff McDonald, “Rajat Gupta: Touched by Scandal,”
Fortune
, October 1, 2010.

The conversation between Gupta and Rajaratnam about Goldman’s board debating buying a bank or an insurer like AIG:
US v. Rajaratnam
, Government Exhibit 534-T-R.

It was Thursday, September 11, 2008, and Raj Rajaratnam was starting to feel like a boxer fighting the legend Muhammad Ali:
US v. Rajaratnam
, Government Exhibit 616-T, Transcript of a wiretapped conversation between Rajaratnam and Anil Kumar, September 11, 2008.

The conversation between Rajaratnam and Kumar:
Ibid.

He was actually calling from Dublin, where he was huddled in a retreat with members of the Young Presidents’ Organization:
Ibid.

“Anand Mahindra’s got fifty people meeting in Montauk…he’s invited me to it”:
Ibid.

Kumar was constantly “scheming” and subsequent remarks by Rajaratnam to Gupta:
US v. Rajaratnam
, Government Exhibit 534-T-R, Transcript of a wiretapped conversation between Rajaratnam and Gupta, July 29, 2008.

Rajaratnam’s tsunami appeal at the Stone Rose Lounge:
Anita Raghavan, “Power and Pleasure,”
Forbes
, October 11, 2010.

“I asked my guy if KDB is gonna buy” and subsequent conversation between Rajaratnam and Kumar:
US v. Rajaratnam
, Government Exhibit 616-T.

Kumar conversation with Rajaratnam on August 15:
US v. Rajaratnam
, Government Exhibit 553-T-K, Transcript of wiretapped conversation between Kumar and Rajaratnam, August 15, 2008.

“Have you spoken to Hector?” and subsequent conversation between Rajaratnam and Chiesi:
US v. Rajaratnam
, Government Exhibit 554-T, Transcript of wiretapped conversation between Rajaratnam and Chiesi, August 15, 2008.

“Alright, thanks a lot man” and subsequent conversation between Rajaratnam and Rengan:
US v. Rajaratnam
, Government Exhibit 559-T, Transcript of wiretapped conversation between Rengan and Raj Rajaratnam, August 15, 2008.

Rengan relaying his conversation with Palecek to Raj:
US v. Rajaratnam
, Government Exhibit 563-T, Transcript of wiretapped conversation between Rengan and Raj Rajaratnam, August 15, 2008, 5:41 p.m.

Galleon’s Technology funds had quadrupled their position in AMD:
US v. Rajaratnam
, Government Exhibit 22, Galleon Technology and Diversified Daily Closing Position in AMD Stock (AMD), April 1, 2008, through October 8, 2008.

“It’s not September 15th”:
US v. Rajaratnam
, Government Exhibit 616-T.

Geetanjali Gupta’s memory of her father’s agitated state on the weekend of September 21, 2008:
US v. Gupta
, Testimony of Geetanjali Gupta, June 11 and 12, 2012.

Geetanjali Gupta’s wedding on June 21, 2008:
Described by Suzanna Andrews in “How Rajat Gupta Came Undone,”
Bloomberg Businessweek
, May 19, 2011, and in several sentencing letters.

“Many Indian parents (mine included) forbade dating”:
Letter written by Rajat Gupta’s niece, Nandita Gupta, on behalf of her uncle before his sentencing.

What would Geetanjali think:
Letter written by Gupta’s daughter’s friend Bhakti Mirchandani before Gupta’s sentencing.

Gupta’s wondering if his lack of emotion was rooted in the early death of his parents:
Gupta’s taped remarks at Creativity and Personal Mastery class, taught by Srikumar Rao at Columbia Business School, April 2004.

Geetanjali met Rajaratnam when he came to pitch New Silk Route:
US v. Gupta
, Geetanjali testimony.

Byron David Trott’s actions on the morning of September 23, 2008:
US v. Gupta
, Testimony of Byron Trott, May 23, 2008.

Trott’s conversation with Buffett:
Ibid.; Andrew Ross Sorkin,
Too Big to Fail
(New York: Penguin, 2009).

The call from Jon Winkelried and subsequent conversation:
US v. Gupta
, Trott testimony.

Trott’s conversation with Goldman’s executives in New York and the overture to Buffett:
Trott testimony; Sorkin,
Too Big to Fail
; Chris Blackhurst, “Billionaire Buffett and the Only Banker He Trusts,”
Evening Standard
(London), September 25, 2008.

Buffett going to the Dairy Queen:
Sorkin,
Too Big to Fail
; Trott testimony.

Subsequent meetings on the thirtieth floor:
US v. Gupta
, Trott testimony.

One of Rajaratnam’s cardinal rules was that he not be disturbed during the first half hour and last half hour:
US v. Gupta
, Testimony of Caryn Eisenberg, May 22, 2012.

Rajaratnam’s instructions to Eisenberg on how to handle calls at the start and the end of the trading day:
US v. Gupta
, Eisenberg testimony.

Rajat Gupta’s presence on Eisenberg’s important people list:
US v. Gupta
, Government Exhibit 2300, the second page from Eisenberg’s notebook detailing the list of important callers.

Rajaratnam would sometimes instruct Eisenberg to lie:
US v. Gupta
, Eisenberg testimony.

The description of Rajaratnam’s office with floor-to-ceiling glass walls and a sliding panel:
US v. Gupta
, Eisenberg testimony; Galleon trader Ananth Muniyappa testimony, May 22, 2012.

Will Keaten’s email on Goldman:
US v. Gupta
, Government Exhibit 9094, Email from Will Keaten to Galleon’s Tech and Trading Group, September 16, 2008.

Shortly after 3:54 p.m. on Tuesday, September 23, Gomes, Gupta’s secretary, dialed Rajaratnam’s direct line:
US v. Rajaratnam
, Testimony of Carol Ann Shields, an information technology security program manager, March 29, 2011.

It was the only call to Rajaratnam’s direct line since 2:27 p.m. that day:
US v. Gupta
, Eisenberg testimony.

Eisenberg’s recollection of the caller and her move to find Rajaratnam:
Ibid.

It lasted thirty-five seconds at most:
US v. Gupta
, Government Exhibit 50 says the duration of the call from the McKinsey conference room to Rajaratnam’s direct line was 30 to 35 seconds.

Rajaratnam summoning Rosenbach and Rosenbach reappearing after less than a minute in Rajaratnam’s office to say “Buy Goldman Sachs”:
US v. Gupta
, Eisenberg testimony.

At 3:56:44 p.m., Rosenbach managed to buy almost $25 million of Goldman stock:
US v. Gupta
, Testimony of Ananth Muniyappa; Government Exhibit 53, a chart showing trading by a portfolio code associated with Rajaratnam in Goldman stock on September 22 and 23, 2008; Government Exhibit 1622, an instant-message communication between Muniyappa and a Deutsche Bank salesman at the market close on September 23, 2008, where the salesman says he bought 200,000 shares of Goldman for Galleon portfolio manager and trader Rosenbach at a price of $124.8368 each; Government Exhibit 1619, an instant-message exchange between Muniyappa and Rosenbach at 4 p.m. on September 23, 2008, where Rosenbach tells Muniyappa to allocate 150,000 shares to Rajaratnam’s portfolio and keep 50,000 shares for his fund.

Ananth Muniyappa’s position at Galleon, his location on the trading floor, his duties, and the portfolio managers he traded for:
US v. Gupta
, Testimony of Ananth Muniyappa, May 22, 2012.

Rajaratnam turned to Muniyappa and ordered him to buy 100,000 shares of Goldman stock:
Ibid.

Muniyappa’s phone conversation with Ted Backer:
Ibid.

“bgt 67,200 GS @ 124.0343, fyi,” instant-messaged Backer:
US v. Gupta
, Government Exhibit 1620, instant message from Ted Backer at Morgan Stanley to Muniyappa on September 23, 2008, at 4:01 p.m.

Muniyappa allocated 217,200 shares of Goldman stock to Rajaratnam’s portfolio:
US v. Gupta
, Muniyappa testimony.

The physical state of Leon Shaulov, who ran the Buccaneers fund, when the Buffett news came out:
Ibid.

“Thx for the heads up”:
Government Exhibit 1629, Email from Leon Shaulov to Gary Rosenbach on September 23, 2008, at 6:16 p.m.

First conversation between Ian Horowitz and Rajaratnam on September 24, 2008:
US v. Gupta
, Government Exhibit 21-T, Transcript of a wiretapped conversation between Rajaratnam and Horowitz on September 24, 2008, at 7:09 a.m.

An hour later, Rajaratnam telephoned Horowitz:
US v. Gupta
, Government Exhibit 22-T, Transcript of a wiretapped conversation between Rajaratnam and Horowitz on September 24, 2008, 7:56 a.m.