Former Goldman Sachs Group Inc board member Rajat Gupta will likely testify in his own defense at the insider trading trial in which he is accused of illegally leaking corporate secrets to now-imprisoned hedge fund manager Raj Rajaratnam.
The likelihood of Gupta giving his version of events was revealed in a series of exchanges between the judge and his main defense lawyer in US District Court in New York on Friday afternoon after the jury had been sent home for the weekend.
"It's highly likely my client will testify," the lawyer, Gary Naftalis, told Judge Jed Rakoff.
Naftalis cautioned that Gupta may change his mind about testifying, but the judge said the defense must notify federal prosecutors in a timely way. Rakoff said he expected all of Tuesday to be taken up with Gupta's testimony. The trial began on May 21 and closing arguments are expected on Wednesday.
Gupta's decision, while relatively rare, is not unprecedented in high profile white collar crime trials. Chief executives such as WorldCom's Bernie Ebbers, Tyco's Dennis Kozlowski and Enron's Jeffrey Skilling, each took the stand at their trials. The were all convicted.
Gupta, 63, is fighting charges that he illegally divulged financial information to his one-time friend and business associate, Galleon Group founder Rajaratnam, between March 2007 and January 2009 while serving on the boards of Goldman and Procter & Gamble Co.
Rajaratnam, who was convicted last year and is serving an 11-year prison term, opted not to testify in his own defense. If convicted on charges of securities fraud and conspiracy, Gupta faces a possible maximum 25 years in prison.
The jury has heard about Gupta's humble beginnings in India and his rise to the upper echelons of the global corporate elite. He headed business management consultancy McKinsey & Co for nine years and is associated with philanthropies combatting AIDS, tuberculosis and malaria.
Through his lawyers, Gupta contends the government's case is circumstantial and speculative. Gupta and Rajaratnam had a falling out in 2008 and Gupta lost all of a $10 million investment with Galleon, according to the defense.
On Friday, the jury watched a video deposition by Berkshire Hathaway senior insurance executive Ajit Jain, who said he knew Gupta socially. At one of their occasional lunches on Jan. 12, 2009 in Stamford, Connecticut, Gupta told him about losing money with Rajaratnam, Jain testified.
"I remember that he told me had been jipped, cheated by Rajaratnam and lost $10 million," Jain said in the deposition.
Earlier on Friday, federal prosecutors wrapped up their leg of the case with a third and final day of testimony by their star witness - Goldman Sachs Chief Executive Lloyd Blankfein.
Prosecutors also played several court-approved FBI wiretaps of Gupta leaving Rajaratnam friendly voicemail messages on his phone in 2008, such as "calling to catch up whenever you get a chance, bye."
Blankfein returned to the witness stand on Friday for a second straight day of cross-examination by Naftalis who quizzed the investment bank's chief executive about how well Goldman guards company secrets.
Naftalis asked Blankfein about Goldman's decision to cut its 32,500 workforce by 10% in October 2008 during the financial crisis. The Wall Street Journal reported the job cuts on Oct. 23, 2008, before the employees who were being laid off knew about them, the jury heard.
"Unfortunately, a good number of people participated in the process and they did know," said Blankfein.
The October 2008 job cuts are not in the indictment against Gupta. But part of the defense strategy is to argue that Rajaratnam had many sources of information other than Gupta to make stock trades and that leaks occurred out of Goldman.
It is rare for a chief executive of a major corporation to testify in a criminal trial, but Blankfein has been called by the
prosecution twice in the past 15 months. He also testified at Rajaratnam's trial in the same court. Neither Goldman nor Blankfein is accused of any wrongdoing in the case.
Blankfein calmly dealt with hours of questioning by Gupta's defense attorney, cocking his head to the left or right as he listened to a question and smiling at the jurors.
Under questioning by prosecutors, Blankfein has said several times either that all discussions at board meetings were
confidential, or that he did not authorize Gupta to share information about the bank that was discussed at board meetings.
The case is USA vs Gupta, US District Court for the Southern District of New York, No. 11-907.