(Adds background cross-examination at paragraph 18).
April 15 (Bloomberg) - about an hour before prosecutors asked ex-galion Group LLC U.S. President Richard Schutte approximately 25 million in investments, that he has received from Raj Rajaratnam and his family, they seek to prevent Schutte preparation for the issue of the defence lawyers. "It is the cross-examination,"Assistant U.S. Attorney Reed Brodsky said the judge at a Conference of sidebar in the trial of the Rajaratnam insider trading until the Court broke for lunch yesterday." Defence lawyers "should not have the chance to talk to his lawyers who are here in the courtroom and are working closely with him and prepares to start for this."When the trial resumed, Brodsky strewn Schutte questions on whether if Rajaratnam, co-founder of the Galleon, had invested in the funds of Schutte, tails Capital Advisors LLC, seeking to show that the key to the defence witness was biased. Schutte confirmed that Rajaratnam had investments.The confrontation could lead jurors to ignore a large part of the prior of the Schutte testimony if they conclude that defence lawyers were "hiding something" by the investment of the Rajaratnam explaining not earlier in tails, said Anthony Barkowa former Attorney in Manhattan, who heads a centre on criminal law at the University of New York. "" Barkow, it is likely that the defence will challenge the credibility of the witnesses for the Government and perhaps even the prosecutors ", said in a telephone interview. "But when waste you your own credibility like this, it is difficult to attack someone else.".Cross-ExaminationRajaratnam, 53, was found since March 8 in Federal Court in Manhattan in the largest crackdown initiated of hedge funds in the history of the United States. The money born Sri Lankan Manager and co-founder of the Galleon is accused of winning $ 63.8 million of Councils disclosed by insiders and hedge fund traders.He denies wrongdoing, saying: he based his trades on research.A large part of the defence of the Rajaratnam, which began on 11 April, focused on the testimony of Schutte, who works at the Galleon from 2004 until last year and remains a consultant to the hedge fund. Friendly questioned by counsel for the defence, Schutte examined scores of analysts, accounts of news reports and other documents that the Defense says are at the base of the trades of Rajaratnam in Intel Corp., Google Inc., Goldman Sachs Group Inc. and other companies.Schutte testimony ended yesterday.Cross-examination of ResponseOn of the Board of Schutte, Brodsky sought to undermine his testimony showing that Rajaratnam haven't seen research reports, they contain conflicting recommendations and that the trades of the Rajaratnam coinciding with his receipt of the United States's what is inside information.Brodsky concluded his examination by querying Schutte on tails, which Schutte formed last year and manages now $ 35 million. Schutte said the Rajaratnam family has invested $ 15 million in the tails in January and Rajaratnam to $ 10 million in September.The evidence on tails can make it appear as if the Schutte testimony was "purchased"."," Stuart Slotnick, a lawyer of criminal defence with Buchanan Ingersoll & Rooney PC in New York, said in a telephone interview. At the same time, he said, "the jury may say that" this is the mode of works in the industry, and I love him. ". Many of the Government witnesses were people who pleaded guilty of crime. "" "Court of routine and Ordinary'After yesterday, Jim McCarthy, a spokesman for Rajaratnam, said the defence was"well aware"of the investment of the Rajaratnam in tails, deemed"routine and regular ". McCarthy reiterated today that the defence was "well aware of these arrangements to current affairs."Defence lawyers had urged the judge not to allow that the jury to hear evidence of the investment, according to a transcript of a Conference "sidebar" outside the presence of the jury. "" Oppose this as being relevant and much more prejudicial than probative and is likely to confuse and mislead the jury ", defence lawyer Michael Starr told U.S. District Judge Richard Holwell. Another lawyer of the defence, Terence Lynam, asked if the Government can introduce some "actual amounts" Rajaratnam after investment that Holwell said the evidence of the tails of Rajaratnam investment showed "Potential bias" Schutte, and he allowed to come before the jury, prosecutors sought to ensure that the defence has step "talk with Mr. Schutte" during the lunch hour-long break.No Coaching "we did a not talk to the lawyers of the people and their coach through their counsel in cross-examination, Brodsky."They will be.""Lawyers are generally prohibited to talk with their witnesses, the cross-examination of the adversary.The transcript is not clear when prosecutors or defence has learned from the investment of the Rajaratnam in tails. Alison Preece, a spokesman for the Schutte Attorney, Alan Vickery, had no immediate comment. Vickery, said yesterday prosecutors "had to resort to innuendo to try to push the effect" of the testimony of Schutte.Le April 12, the second day of direct testimony of Schutte to Rajaratnam, Starr asked the judge to prosecutors in order to provide an overview of their expected cross-examination. "" I believe that I would say the defence thus, then, they ask all the questions, I will ask, "Brodsky said, according to a transcript of a sidebar Conference date here. "I think that I have very important questions that go to the question of the credibility of the witness".Confidential ShowingBrodsky offered to make a confidential screening at Holwell facts, that he had collected. The judge said that the two parties would discuss it later, as they did yesterday.Summations in case can start next week. Now his testimony as an expert witness for the defence is Gregg Jarrell, the top Economist of the U.S. Securities and Exchange Commission from 1984 to 1987.The case is U.S. v. Rajaratnam, 1: 09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).-Editors: Stephen Farr, John Pickering
To contact the reporters on this story: David Glovin Federal Court in Manhattan to glovin@bloomberg.net; Patricia Hurtado in the Federal Court in Manhattan to phurtado@bloomberg.net; Bob Van Voris in Federal Court in Manhattan to the rvanvoris@bloomberg.net
To contact the editor responsible for this story: Michael Hytha to the mhytha@bloomberg.net
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