Rajaratnam-Chiesi phone taps spice up trial

The jury in the high-profile Raj Rajaratnam insider trading trial heard plenty of racy language on phone taps on Monday, even though the judge had deleted portions as being too risque.

The prosecution played recordings in Manhattan federal court of a former trader, Danielle Chiesi, in conversations with Galleon Group founder Rajaratnam and separately with a friend and former Akamai Technologies Inc executive about the Internet technology company's earnings in 2008.

"They're gonna guide down," Chiesi was heard on a call with Rajaratnam on July 24, 2008, nearly a week before Akamai publicly announced second-quarter earnings and outlook for the rest of the year.

"I just got a call from my guy. I played him like a finely-tuned piano."

Prosecutors contend the "my guy" to whom Chiesi referred was Akamai senior marketing director Kieran Taylor, who has not been charged in the case. Attempts to reach Taylor for comment on Monday were unsuccessful.

Chiesi pleaded guilty in January, and is among 19 executives, traders or lawyers who have admitted to crimes in Wall Street's biggest insider trading case in decades. Rajaratnam has pleaded not guilty and his trial is in its fifth week.

"...Please don't fuck me on this," Chiesi told Rajaratnam in one call. "I'm not short anything."

In a short sale, investors sell borrowed shares on bets the stock price will fall, hoping to buy the shares back at a lower price and realize a profit. Rajaratnam's lawyers said in opening statements on March 9 that he took a significant short position on Akamai based on Galleon analysis before he received any information from Chiesi.

On July 30, 2008, the day Akamai announced its earnings, Rajaratnam called Danielle Chiesi, according to another phone tap played in court on Monday.

"Hi Dani. Raj. I just wanted to say thank you."

She is heard saying, "It's mentally fabulous for me," and "I love the way I feel right now."

Rajaratnam is charged with 14 counts of conspiracy and securities fraud, accused of making $45 million in illicit profits between 2003 and March 2009 on leaked stock tips. His lawyers contend that research, analysis and market speculation, not material company secrets, guided his trades.

If convicted, the Sri Lankan-born money manager faces as much as 20 years in prison.

A prosecutor said the government expected to rest its case on Wednesday. The defense will then get to present its case.

Other recordings previously played for jurors have been laced with profanity, but federal prosecutors and defense lawyers wanted to keep out certain conversations on Monday.

"There may be ways in which we can make them less blue, for want of a better word," prosecutor Jonathan Streeter suggested to U.S. District Judge Richard Holwell before the jury was seated. "Other 'blue' language shows a close relationship."

Also on Monday, a US prosecutor said the government would not call a key cooperating witness, former Intel Corp and Galleon employee Roomy Khan, to testify. Khan, who has been associated with Rajaratnam for more than a decade, has pleaded guilty to criminal charges but has not been sentenced.

U.S. prosecutor Reed Brodsky told the judge that phone records, trading records and instant messaging records would be presented as evidence that Khan and Rajaratnam conspired to gather secrets about Google Inc, Polycom Inc video teleconference technology company and Hilton Hotels.

The case is USA v Raj Rajaratnam et al, US District Court for the Southern District of New York, No. 09-01184.