FULL TEXT USA v. Gupta 2nd Circuit

March 26, 2014

Now Online at BrokeAndBroker.com:

Below are verbatim extracts from the 2nd Circuit Opinion.

Before: NEWMAN, KEARSE, and POOLER, Circuit Judges.

Appeal from a judgment of the United States District Court for the Southern District of New York, Jed S. Rakoff, Judge, convicting defendant of securities fraud, see 15 U.S.C. §§ 78j(b) and 78ff, and conspiracy to commit securities fraud, see 18 U.S.C. § 371, based on insider trading.


Page 1 of the Opinion 

Defendant Rajat Gupta ("Gupta") appeals from a judgment entered in the United States District Court for the Southern District of New York on November 9, 2012, following a jury trial before Jed S. Rakoff, Judge, convicting him on three counts of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371. Gupta was sentenced principally to 24 months' imprisonment, to be followed by a one year term of supervised release, and was ordered to pay a fine of $5,000,000. In an amended judgment entered in February 2013, Gupta was also ordered to pay restitution in the amount of $6,218,223.59, an order that is the subject of a separate appeal that has been held in abeyance pending decision of the present appeal. In the present appeal, Gupta challenges his conviction, contending principally that he is entitled to a new trial on the grounds that the trial court erred (1) by admitting statements of a coconspirator, recorded in wiretapped telephone conversations to which Gupta was not a party, and (2) by excluding relevant evidence offered by Gupta. For the reasons that follow, we conclude that Gupta's contentions lack merit, and we affirm the judgment.

Page 2 of the Opinion

Thus, there was ample evidence to support findings (1) that the members of the conspiracy in which Gupta passed confidential Goldman Sachs information to Rajaratnam included not only Gupta and Rajaratnam but also Rosenbach, Horowitz, and Shaulov, and (2) that Rajaratnam's statements and explanations to Horowitz served to further the conspiracy by informing Horowitz, and eventually Shaulov, of the status of that conspiracy, reassuring them of its continuity, and preserving trust and cohesiveness among the coconspirators. Rajaratnam's statements in his telephone calls to Horowitz were properly admitted under Rule 801(d)(2)(E).

Page 20 of the Opinion

Although Gupta argues that Rajaratnam was simply "bragging" about his sources (Gupta brief on appeal at 35), this was at best an argument for the jury. Further, to the extent that it could be permissible to view the conversation as Gupta urges, i.e., that it was merely a "casual conversation about past events," not one in which Rajaratnam's statements were in furtherance of the conspiracy (Gupta brief on appeal at 35-36 (citing United States v. Lieberman, 637 F.2d 95, 102 (2d 4 Cir. 1980))), the clear-error standard for reversal has not been met. To the extent that there may be 5 more than one permissible view as to Rajaratnam's purpose in making the October 24, 2008 statements to Lau, the district court's determination that the statements about Goldman shares were made in furtherance of the conspiracy was a choice between or among permissible inferences and hence cannot be deemed clearly erroneous, see Anderson, 470 U.S. at 574. Gupta's contentions provide no basis for overturning the district court's finding that Rajaratnam's statements to Lau were in furtherance of the insider-trading, loss-avoidance conspiracy of which Gupta was a member and by which Gupta sought to profit, and thus were admissible.

Page 22-23 of the Opinion