Accused Rajaratnam "confident" can win at trial

NEW YORK - Lawyers for Raj Rajaratnam, the billionaire founder of Galleon hedge fund accused of insider trading, said the U.S. government's case is weak and they were confident of winning any trial, according to a letter filed in court on Thursday.

Rajaratnam's lead lawyer, John Dowd, said the hedge fund manager was being treated worse than epic swindler Bernard Madoff, who was released on $10 million bail last December after his initial confession to a multibillion-dollar fraud.

Dowd asked a Manhattan federal court magistrate judge to reduce his client's bond to $25 million from $100 million and to modify his travel restrictions, arguing he had no incentive to flee because of strong family ties to the United States and $30 million in property.

"The idea that Mr Rajaratnam would simply abandon those properties to avoid a trial that he is confident of winning is neither realistic nor credible," Dowd, a high-profile Washington lawyer, said in a letter to Magistrate Judge Frank Maas.

Sri Lankan-born Rajaratnam, 52, a U.S. citizen, was arrested on October 16 along with five others in what prosecutors described as the biggest hedge fund insider trading case ever. The charges carry a possible prison sentence of up to 10 years.

Thursday's letter said Rajaratnam's lawyers have conferred with the government, "which does not consent to this request." A judge will consider the request and possibly schedule a hearing at a later date.

A spokeswoman for the office of the U.S. Attorney in Manhattan, which brought the criminal charges, declined to comment.

The letter described Rajaratnam as "intensely focused" on Galleon business and "has no intention of abandoning Galleon and its employees." It said that after his arrest, Rajaratnam ordered document preservation at Galleon and "that all shredders be removed from the office."

Galleon liquidated most of its $3.7 billion portfolio last week after investors began demanding their money.

MAJOR COMPANIES

The U.S. Securities and Exchange Commission filed civil charges against the six, who included employees of some of the most prestigious companies in the United States, including International Business Machines; Intel Capital, a subsidiary of chip maker Intel Corp; and top management consulting firm McKinsey & Company.

Federal prosecutors have said that the purported insider trading scheme yielded a profit of more than $20 million.

The SEC said those accused traded on insider information from 10 companies. They included Hilton Hotels Corp, Google Inc, IBM and Advanced Micro Devices Inc.

All six were released on bond. Rajaratnam's bond was $100 million and his travel restricted to within 110 miles of New York City. On Thursday, lawyers asked the judge to give him permission to travel all over the United States.

"The case is at its earliest stages, and the Government does not yet have the critical information that will place its current allegations in the proper context and dispel any allegation of criminal conduct," Dowd and lawyers at law firm Akin Gump said in the letter.

"Moreover, the strength of the Government's evidence, which relies heavily on a single cooperating witness widely reported to be Roomy Khan, has been assailed in a series of recent articles published in the New York Times and Wall Street Journal."

The letter cited reports that said Khan, a former employee of Intel, was a convicted felon.

One of the hedge fund manager's co-defendants, Rajiv Goel, was granted release on bond of $750,000 on Thursday in Manhattan federal court. He had initially been granted bond by a court in California, where he worked as an Intel Capital treasury department managing director.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-mj-2306.

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