What went wrong with defense strategy?

[ by Howard Haykin ]

Twelve hundred white-collar criminal defense lawyers descended on Las Vegas for an ABA legal conference to sharpen their skills and learn which strategies employed in 2012 were successful, and which were not as successful.

Gary Naftalis, who represented Rajat Gupta, the former Goldman Sachs board member, who was found guilty of securities fraud and conspiracy at a Manhattan federal court trial last June for leaking boardroom secrets to hedge fund manager Raj Rajaratnam.  Mr. Gupta received a 2-year prison sentence which is on hold while he appeals his conviction. 

Mr. Naftalis told his audience that, in hindsight, he would not have shared certain information with prosecutors before they ultimately brought insider trading charges against his client, Rajat Gupta.  Specifically, Naftalis said he had explained some of Gupta's potential defenses to lawyers at the U.S. Attorney's Office in Manhattan before they secured an indictment.  In those conversations, Naftalis previewed the "mega themes" of the defense, though he said he strategically did not lay everything out.

For example, one theme was that Gupta did not profit from the trading activity and did not trade on inside information himself.  The plan, Naftalis said, was to give prosecutors a sense of the potential gaps in the case against Gupta.

"If you could run the film again and we knew it wouldn't work, we obviously wouldn't tell them anything," Naftalis, a partner at Kramer Levin Naftalis & Frankel,

Gupta, who also was once the global head of elite consultancy McKinsey & Co, is one of the most high-profile defendants in a recent string of insider trading prosecutions.  Before his October 2011 indictment, Gupta had been cited by prosecutors as an unindicted co-conspirator in the Rajaratnam case.

On the same conference panel was the lead prosecutor in the Gupta case, former assistant U.S. Attorney Reed Brodsky.  Mr. Brodsky, who soon will join Gibson, Dunn & Crutcher, said that while the public perception after Rajaratnam's May 2011 conviction was that Gupta would soon be indicted, "we had a fairly open mind on whether to charge" him.  Investigators interviewed 45 individuals before deciding to pursue an indictment, he said.

"At the end of the day the facts drove the answer for the U.S. Attorney's Office," Brodsky said.

The case is U.S. v. Gupta, U.S. District Court, Southern District of New York, No. 11-00907.
 

For further details, go to:   [ Reuters, 3/8/13 ].