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A conflicted jury finds Rajat Gupta guilty

William Alden & Azam Ahmed/ 17 Jun 12 | 12:58 AM

The jury for the insider trading trial of Rajat K Gupta took only two days to reach its verdict. But the process was not easy, with several jurors saying they felt conflicted.

After fewer than 10 hours of deliberations, the jury found Gupta, the retired head of the consulting firm McKinsey & Company and a former Goldman Sachs board member, guilty on one count of conspiracy and three counts of securities fraud. The verdict capped a swift fall from grace for Gupta, the most prominent business executive to be snared in the government’s crackdown on insider trading.

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Gupta, a native of Kolkata, India, who went to Harvard Business School on a scholarship after being orphaned as a teenager, elicited sympathy from several members of the jury. To the jury’s foreman, Rich Lepkowski, an executive for a nonprofit organisation, Gupta was an example of the American dream, someone who had lived a “storybook life."

“We looked at him and what he had done professionally," said Lepkowski, of Ossining, NY, who turned 51 today. “We were hoping he would walk out of this courthouse."

But the mounds of circumstantial evidence against Gupta proved too overwhelming to ignore, jurors said.

Using phone records and trading logs, prosecutors convinced jurors that Gupta had leaked boardroom secrets to his former friend and business associate, the fallen hedge fund titan Raj Rajaratnam, who is currently serving an 11-year sentence for insider trading.

Prosecutors showed that on several occasions, Gupta had called Rajaratnam within minutes of participating in Goldman Sachs board meetings. The hedge fund manager then traded on secret information, later boasting on recorded calls that he had gotten a tip from someone on Goldman’s board. “On the counts we convicted, we felt there was enough circumstantial evidence that any reasonable person could make that connection," Lepkowski said.

Still, the decision left some jurors visibly upset. Several were crying as the verdict was read in the courtroom on Friday. One juror, Agnes Sanders, a retired librarian who was reached by phone after the trial, said she was glad it was over.

Gary P Naftalis, a lawyer for Gupta, said his client would most likely appeal the decision, adding that he continued to believe Gupta was innocent.

Part of Gupta’s defense focused on his once-vaunted status in corporate circles. A man with Gupta’s credentials would not choose to violate the law in the seventh decade of his life, Naftalis argued.

Indeed, jurors struggled with the question of motive. Why would Gupta, a wealthy man by all accounts, choose to violate his corporate responsibilities by passing confidential information to Rajaratnam? What did he stand to gain?

To find their answer, jurors spent time analysing the legal definition of conspiracy. After asking the judge in the case, Jed S Rakoff, for clarification of that term, the jurors decided that Rajaratnam’s “manipulative" nature had helped lead Gupta into the illicit arrangement, Lepkowski said.

“I wouldn’t say he was an unwilling participant, or that greed wasn’t a part of this," Lepkowski said. “But I am saying that Rajaratnam made it easy for Rajat Gupta to break the law."

The juror Ronnie Sesso, a 53-year-old youth advocate at the Administration for Children’s Services in Manhattan, summed the motive up as “a need for greed."

The jury never actually heard from Gupta, whose family sat in the spectator’s gallery throughout the monthlong trial. Last week, Naftalis said his client was “highly likely" to testify, but he later reversed course, declining to put him on the stand.

To Ms. Sesso, that decision wasn’t consequential. “It wouldn’t have mattered to me if he took the stand or not," she said.

A favoured witnesses during the trial was Lloyd C Blankfein, the chief executive of Goldman Sachs. Blankfein’s testimony came on days filled with numerous objections and sidebars, representing a lull in the trial for jurors, they said.

Despite repeated attempts by the defense to discredit him, Blankfein seemed at ease before the court, often cracking jokes from the stand.

“I appreciated Blankfein’s levity from the stand because it helped to break up that tediousness," Lepkowski said. “I certainly didn’t find him an unhelpful or noncredible witness."

©2012 The New York Times News Service

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