U.S. plans to play Goldman tapes at Rajaratnam trial

By Grant McCool and Jonathan Stempel

NEW YORK (Reuters) - U.S. prosecutors gave a glimpse of their strategy in the upcoming insider trading trial of Raj Rajaratnam, saying they will introduce audiotapes showing the Galleon Group hedge fund founder conspired to get illegal tips about Goldman Sachs Group Inc.

At a hearing on Friday, prosecutors told the judge they intend to show that Rajaratnam conspired with former Goldman director Rajat Gupta to get the tips.

They said the evidence concerns the $5 billion investment in September 2008 by Warren Buffett's Berkshire Hathaway Inc in Goldman at the height of the financial crisis, as well as Goldman's financial results. Goldman has not been accused of any wrongdoing.

"I take it the government is going to present evidence that Mr. Gupta is a co-conspirator?" U.S. District Judge Richard Holwell asked Assistant U.S. Attorney Jonathan Streeter.

"Yes," Streeter replied, at the hearing in Manhattan federal court. "That evidence we think establishes Gupta was a co-conspirator."

Rajaratnam, whose hedge fund once managed $7 billion at its peak, is charged with 14 counts, including securities fraud and conspiracy, in the criminal case. The trial starts on Tuesday with jury selection. He also faces an SEC civil lawsuit.

The government's widespread use of wiretaps has been a hallmark of the Galleon case. Prosecutors have said they could present as many as 173 intercepted mobile phone audio recordings to the jury.

Gupta faces civil insider trading claims by the U.S. Securities and Exchange Commission, but he has not been criminally charged. Gary Naftalis, a lawyer for Gupta, was not immediately available for comment.

The case is U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 09-01184.

(Reporting by Grant McCool; Additional reporting by Dena Aubin and Basil Katz; Writing by Jonathan Stempel, editing by Gerald E. McCormick, Dave Zimmerman)