The Manhattan U.S. attorney’s insider-trading crackdown has generated plenty of business for graying, distinguished members of the white-collar bar—and for the large, national law firms many of them call home. But when prosecutors went after Rengan Rajaratnam, the younger brother of imprisoned hedge-fund titan Raj Rajaratnam, the job fell to a relative newcomer, Daniel Gitner of the litigation boutique Lankler Siffert & Wohl.
Gitner succeeded where his predecessors all failed, steadily dismantling the complex case before it reached jurors and then persuading them to knock out the remnants on Tuesday after a speedy deliberation.
A federal jury in Manhattan acquitted Rajaratnam, a former portfolio manager at Galleon Group, his elder brother’s now-defunct hedge fund, of a single count of conspiring with his brother to commit insider trading. Rengan Rajaratnam had initially faced six substantive counts of insider trading on top of the conspiracy count, but prosecutors agreed to drop four of them before trial. The judge granted Rajaratnam a directed verdict on two counts after the government rested its case.
By siding with Gitner and rejecting the remaining count on Tuesday, the jury snapped Manhattan U.S. Attorney Preet Bharara’s astonishing 81-case winning spree in insider-trading prosecutions over the past four years.
To be clear, Gitner, 43, is no rookie. He put the rapper Lil’ Kim behind bars for perjury while working as a federal prosecutor in the Southern District of New York earlier in his career. (He was chief of the SDNY’s general crimes unit from 2003 to 2005.) In 2012, he helped the artist Shepard Fairey avoid jail time for destroying evidence in his copyright fight with The Associated Press over the artist’s “Hope” poster of Barack Obama. But the Rajaratnam case was his biggest to date.
What helped Gitner land the case, he said, was “a very good attorney-client relationship from the start.” A friend put Gitner in touch with Rajaratnam, Gitner told us, and to his knowledge Rajaratnam didn’t audition anyone else for the role.
The government alleged that Rajaratnam knew his elder brother was cheating Wall Street yet still made trades based on Raj’s tips. Prosecutors pointed to trades by Rengan Rajaratnam in a telecom company that closely tracked his brother’s. And they played wiretapped conversations between the two that supposedly showed that Rengan not only knew his brother was pumping sources for insider info but was trying to follow in his footsteps.
Gitner and his colleagues at Lankler Siffert, Derek Chan and Michael Longyear, tried to make the March 2008 trades look less sinister by presenting a broader history of their client’s trading patterns. In the months leading up to the trades, they argued, the two brothers sometimes took opposite positions on the same stocks. That showed that Rajaratnam didn’t have access to his elder brother’s tips and circle of contacts, Gitner told the jurors. “Rengan did not know what Raj knew. That’s why they acted so differently,” Gitner said during his summation. “Context matters. And the trading records, all the records, they undermine the prosecutors’ charges.”
It was an ambitious defense because it meant bombarding jurors with trading records. “When you are the government, you can tell a pretty simple story,” Gitner said. “Providing the context around the story, in order to unhinge it, is harder.”
Gitner was also at a disadvantage in that his version of events was less dramatic, so there was a risk of boring jurors. As Gitner put it, “How do you keep jurors’ attention when all you’re trying to do is explain that nothing happened?” Luckily for Gitner, he drew a highly educated jury, which he told us was his hope all along. (According to The New York Times, Gitner hoped to stay lucky by sticking to an oddly superstitious rule: No haircuts during trial.)
One gamble that paid off for Gitner was his decision to tell jurors that the elder Rajaratnam had been convicted. Before trial, U.S. District Judge Naomi Reice Buchwald ruled that the government couldn’t bring it up unless Gitner did first. He ended up slyly mentioning it while explaining to jurors how his client was living in Brazil at the time of his indictment and could have avoided prosecution.
“Ask yourself what type of person … who’s told by a Brazilian lawyer ‘you can stay,’ who knows his brother is sitting in jail for 11 years for insider trading, decides within 19 minutes after learning that he had been indicted that he’s going to come home,” Gitner said during his closing argument. “Someone who knows he’s innocent.”
“I wouldn’t say I villainized Raj. But I didn’t defend him. It wasn’t my job to defend him,” Gitner told us. “It was my job to point out the differences between Raj and Rengan.”
Gitner got the job done on Tuesday, winning a total defense verdict after just four hours of deliberation. More high-profile assignments will undoubtedly follow.