Authors: Anita Raghavan
Tags: #Finance, #Business & Economics
“I live in Yonkers, so I know,” said Judge Rakoff.
“I am going to a restaurant in Yonkers which you probably know,” said Blankfein.
“If it’s the one I am thinking of, I can’t afford it,” retorted Judge Rakoff. (The proprietor of the restaurant told Blankfein that Judge Rakoff is a regular.)
Naftalis, in his cross-examination of Blankfein, tried to show that Gupta was so loyal to Goldman that when Blankfein asked him to stay in the midst of the financial crisis, he readily agreed, doing Goldman a favor. “It wasn’t going to be helpful to have a director resign from the firm if it was going to be construed that there was a problem at the firm, which there wasn’t,” conceded Blankfein.
It was clear from the start that Naftalis’s cross-examination of Blankfein was going to be testy. Naftalis asked Blankfein if he was number one at Goldman Sachs.
“No. 1 is not an official title,” said Blankfein, smiling. “Chairman and CEO” was his title. Then Naftalis asked if Blankfein succeeded someone called Henry Paulson. “His name is Hank Paulson,” said the wisecracking Blankfein.
Naftalis, trying to undercut the prosecution’s contention that Gupta leaked information on October 23, 2008, about Goldman’s fourth-quarter loss, showed an exhibit of a
Wall Street Journal
story that morning saying Goldman was planning to cut 10 percent of its workforce. Naftalis suggested that was the reason Goldman’s stock started to slide. But Blankfein said he did not remember the downsizing article. Naftalis would seize on Blankfein’s remark to unleash an unusual attack on the Goldman chief executive in his closing arguments.
When Blankfein left the courtroom, he acknowledged Gupta with a smile. Gupta didn’t return it.
On Friday, June 8, after calling twenty witnesses over twelve days, the government rested its case. Although the defense had submitted the names of a number of character witnesses it planned to call to testify on Gupta’s behalf, there was still no word on whether Gupta himself would take the stand. Since the trial started, Naftalis had held it out as a possibility. After the jury left for the weekend, Naftalis said it was “highly likely” that Gupta would testify the following week. It was a risky gambit. Most lawyers advise a criminal defendant not to take the stand because it can open up the person to wide-ranging questioning from prosecutors. Gupta wanted to explain to the jury his version of events, but by Sunday, he and his lawyers decided against it, a move he would later come to second-guess.
Instead, his eldest daughter, Geetanjali, an accomplished Gupta in her own right—she is a graduate of both Harvard Law School and Harvard Business School, has a bachelor’s in applied math from Harvard College, and works for the Harvard endowment—told his story. At 4:30 p.m. on Monday, June 11, the fifteenth day of the trial, Geetanjali, wearing a simple gray dress and jacket and black high-heeled shoes, her long hair sensibly pulled back, walked calmly to the witness stand. In a forthright and compelling fashion, she testified about the events around September 20, 2008. It was an important weekend for her. On September 20, she celebrated her thirtieth birthday, and the next day was her mother’s birthday. Geetanjali told the rapt jury that her father was very upset that weekend about an investment he had with Rajaratnam. “He was running his hand through his hair, which he does when he is stressed,” she recalled.
By Thanksgiving, when the family gathered at her parents’ house in Westport, her father was “quite different from his normal self…He was quite depressed, withdrawn and not himself.” The failed investment was well known within the family. Geetanjali Gupta’s testimony was critical for the defense, as it sought to show that at the time of the alleged insider tipping, Gupta’s relationship with Rajaratnam had so deteriorated that he had no incentive to give him inside information.
Like her father, Geetanjali came off as poised and articulate and her testimony credible.
On cross-examination, prosecutor Reed Brodsky, known for his theatrics in the courtroom, lowered his voice to a barely audible whisper and asked her just two questions:
“Do you love your father?”
“Yes,” she replied.
“Would you do anything for your father?”
“I would do anything for my father, but I would not lie, though, on the stand,” she replied.
After the jury left the courtroom, Geetanjali walked toward her father, who was seated at the defense table. The two embraced. For the first time since the trial had started a month earlier, Gupta was overtaken with emotion: his eyes were moist with tears.
Just before Geetanjali took the stand, Suprotik Basu, a cocksure thirty-four-year-old United Nations executive working on a project to eradicate malaria, testified. When asked how he met Gupta, Basu said that in May 2007 he got an “urgent call” from a colleague in New York who said there was a businessman who “wanted to end all childhood deaths from malaria by 2025.”
A prosecutor sprang up and objected. Judge Rakoff agreed and the testimony was struck.
Basu then testified that he was meeting with Gupta on the afternoon of September 23, 2008, the day of the Buffett investment in Goldman. He traveled with Gupta for a dinner they were attending that evening with the Ethiopian health minister. He had no conversations about Goldman or Warren Buffett with Gupta. “We were focused on our meetings…to close our malaria funding gap,” said Basu.
When asked by the prosecutor Brodsky, Basu said he was not in the room when Gupta took part in the Goldman board call or when a call was placed from a McKinsey conference room, which Gupta was using that day, to Rajaratnam’s direct work line. However, Basu sought to bolster the defense team’s argument that Gupta’s call to Rajaratnam was simply a matter of habit: he was always returning calls between engagements.
“My picture of him is with a earpiece in his ear constantly returning phone calls between meetings,” said Basu.
The defense case took just two and a half days. That was in large part because Judge Rakoff limited the number of character witnesses Gupta could call. And he rejected a major thrust of the defense: Rajaratnam wasn’t tipped by Gupta but by one of Goldman’s own, David Loeb, the head of Asia equity sales. After Geetanjali Gupta finished testifying, lawyers for Gupta worked late into the evening trying to persuade Judge Rakoff to allow them to play two wiretapped phone conversations between Rajaratnam and David Loeb in August 2008. In the calls, Loeb is said to have passed information about Intel and Apple to Rajaratnam. Judge Rakoff ruled against allowing the Loeb tapes in.
On the morning of Tuesday, June 12, Goldman’s outside lawyer Steve Peikin got an email from Loeb’s attorney. Loeb was headed to the courthouse because the defense planned to call him as a witness. “Are you calling Loeb?” Peikin asked Naftalis. Keeping his cards close to the vest, Naftalis didn’t answer. During the morning break, Peikin broached the issue with prosecutor Brodsky who didn’t know either. But the next time Peikin saw Naftalis, he seemed annoyed and asked him: “Are you a government stooge?” The relationship between Goldman and Gupta was so frayed by now that the normally affable Naftalis incorrectly perceived Peikin’s move as a way to telegraph the defense’s strategy to the government.
Just before the defense rested its case, it played a tape of Rajaratnam speaking to one of his lieutenants in which he appeared to confirm Gupta’s allegation that he had cheated in Voyager Capital Partners, the investment vehicle the two men had invested in together.
“When you take leverage you, you know. My problem is, I’m a big boy. I hope Rajat is a big boy. You know?” Rajaratnam told Galleon portfolio manager Sanjay Santhanam in a phone call on October 2, 2008. “And then I didn’t, I, I, I didn’t tell him that I took that equity out, right.” The tape bolstered earlier evidence presented by the defense showing an internal Galleon document that appeared to indicate that Rajaratnam took $25.2 million from Voyager in December 2007.
On June 13, the prosecution and the defense concluded the trial much as they had begun, by offering two polar opposite pictures of Gupta. In his closing argument, assistant US attorney Richard Tarlowe walked through the evidence piece by piece. He said that in the last ten minutes of the trading day on September 23, 2008, there was only one call to Rajaratnam’s direct line, and that call was from Gupta.
“That evidence is devastating for the defendant…If you believe Ms. Eisenberg, it is over, it is over, the defendant is guilty of illegally tipping.” Later, his colleague Reed Brodsky said that Gupta would have to be “one of the unluckiest men in the world” if jurors were to buy defense arguments that he didn’t leak information to Rajaratnam despite a pattern of him calling the Galleon hedge fund manager after board meetings and Rajaratnam trading shortly after the calls.
Naftalis sounded the same themes he had at the start. He said that Gupta had legitimate business reasons for speaking with Rajaratnam and “never did any insider trading, period, zero, none.” If Rajaratnam so relied on Gupta’s insider tips, he would have asked Gupta to remain on the Goldman board rather than take up the position at KKR. He would have said, “You’re my meal ticket there,” said Naftalis. Instead, he told Gupta to take the KKR job “in a heartbeat.”
After walking the jury through the evidence, Naftalis, his voice falling to a faint whisper, appealed to the jury to consider their verdict carefully in the context of a great man’s life: “In a few weeks this case will be a dim memory to you…But for Rajat Gupta this is the only case, and whatever you do here will mark whatever future he has left.”
At 11 a.m. on Friday, June 15, 2012, word trickled out that there was a note from the jury. No one paid much attention at first. An hour earlier, the jury had placed its lunch orders with Judge Rakoff’s court deputy, suggesting that deliberations were set to go into the afternoon. Since the start of the trial, there had been twenty-five notes from the jury for everything from smoking breaks to juror number 6 telling the judge that she knew Goldman president Gary Cohn’s daughter, who attended the Trevor Day School, where she worked.
Reed Brodsky, the prosecutor, saw the court security officer, a tall man with a black goatee, walk into the jury room and come back out. He had nothing in his hands. Evidently he had stuffed the envelope with the word “verdict” written all over it into his pocket. Then he walked into the courtroom. Not seeing Judge Rakoff’s courtroom deputy, Linda Kotowski, in sight, he stood outside the door to Judge Rakoff’s chambers and waited.
Kotowski at that moment was meeting with Stephanie Cirkovich, the press officer for the Manhattan federal court, and Judge Rakoff to discuss press procedures for the jurors in the event of a verdict. The three met for twenty minutes, with some issues left undecided.
“We’ll see when the verdict comes in,” said Judge Rakoff as Cirkovich was leaving his chambers. When she and Kotowski opened the door into the courtroom, the court security officer was standing outside with an envelope. He gave it to Kotowski.
By now, a nervous energy was starting to build in the courtroom. Gupta, dressed in a navy suit, white shirt, and orange-red tie, had returned to the defense table to sit in his usual spot in the third seat. A half hour earlier, he was sitting in the courthouse cafeteria playing cards with a couple of his daughters. No one seemed to know what the jury note was about—or at least they weren’t telling. But when a US marshal appeared, seasoned court observers suspected that there might be a verdict.
Another sign that the jury note might be important came when Alan Friedman, a lawyer at Naftalis’s firm, Kramer Levin, walked over to the press side and pulled away his public relations manager. The two huddled at the back of the room. Then Naftalis returned to the courtroom. He walked straight into the well, skipping his usual banter with the press. He seemed unusually serious. If indeed it was a verdict, it was not a good sign.
Typically, quick verdicts favor the government. David Frankel, Naftalis’s colleague, rose from his position in the second chair and gave his seat to Gupta. It seemed like something deadly serious was about to happen.
At 11:30 a.m., Judge Rakoff entered the courtroom for the penultimate scene. He confirmed what everybody already knew. Gupta sat stoically, as he had every day, at the defense table. Behind him were his wife, Anita, and three of their daughters. The oldest, Geetanjali, who had testified so eloquently a few days earlier, was noticeably absent. She was at the Starbucks coffee shop on the corner of Worth and Lafayette Streets. She had work and needed an Internet connection.
At 11:28 a.m.,
New York Times
reporter Peter Lattman, who was also at the Starbucks, received an email on his BlackBerry that a verdict had been reached. He yelled to a colleague, “They’ve reached a verdict,” and then he turned to Geetanjali and delivered the same news. She looked up from her laptop, startled. The three raced to the courthouse, a block away. Geetanjali managed to slip in just before the jury filed in and sat with her hand on her mother’s shoulder.
At 11:35 a.m., the jury filed into the courtroom. Judge Rakoff reviewed the verdict to make sure it was in proper form. Then Rakoff’s courtroom deputy played her role. “Mr. Foreman, please rise. You say you have agreed upon a verdict,” she said.
“Yes,” he replied.
“On Count 2…not guilty,” he said.
For a moment, it seemed like the jury had found Gupta not guilty.
But then the foreman reeled off a string of “guiltys.”
Gupta sat expressionless, his face as constricted as his future.
In the visitors’ gallery, two of his daughters cried, the younger of the two sobbing loudly. A third Gupta girl embraced them both, tenderly stroking one of her sisters’ hair.
Rajat Gupta’s wife, Anita Mattoo, covered her head in her hands and lowered it. As the jury filed out, the courtroom stood up at once—except the Gupta girls and their mother.
After Judge Rakoff left the courtroom, Gupta hugged his lawyers.
He then turned to his family.
He walked out of the well and locked arms with his daughters and wife in a huge, long embrace. It was sacred ground: a show of private grief in a very public place.