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A second judge has sided with prosecutors over the admissibility of wiretap evidence in the Justice Department’s widening hedge fund insider trading probe, though he offered defense lawyers a glimmer of hope for a renewed motion to suppress. At a brief hearing Wednesday morning, Manhattan federal district court judge Richard Sullivan rejected a motion to dismiss charges and to suppress wiretap evidence by defense lawyers for former Galleon Group trader Zvi Goffer and four co-defendants, setting a May 9 trial date in the case. The men were arrested in November 2009, three weeks after the arrest of Galleon founder Raj Rajaratnam. Lawyers for the defendants argued in their Nov. 3, 2010 joint motion to dismiss and suppress that the government had offered insufficient evidence of an insider trading conspiracy. In addition, they asserted that the securities laws under which the men were charged were unconstitutionally vague as applied in the case, that the government’s wiretap warrants were misleading, and that evidence uncovered via the wiretaps should be suppressed because insider trading is not a predicate offense under the federal law permitting wiretapping. According to Jeffrey Hoffman of Hoffman & Pollok, a lawyer for defendant Jason Goldfarb, Judge Sullivan denied the defendants’ motion on each of the grounds they offered. But the judge also allowed defense lawyers one more opportunity to keep the wiretap issue alive. Hoffman said Judge Sullivan singled out wiretapped calls between Goffer and co-defendant Craig Drimal and their wives, asking both sides to submit additional briefs on their admissibility. The judge also asked for briefing on whether the potentially privileged nature of those calls should warrant the suppression of the entire wiretap record, Hoffman told us. Judge Sullivan’s rejection of the defense suppression motion comes two months after a similar ruling by Manhattan federal district court judge Richard Holwell, who is overseeing the prosecution of Rajaratnam. In November 2010, following a rare Franks hearing on the admissibility of the government’s wiretap evidence, Judge Holwell issued a 68-page ruling permitting prosecutors to use the evidence. As we reported at the time, Judge Holwell ruled for the first time that the government can seek wiretaps in insider trading cases, even though Congress approved only wire fraud and not securities fraud as a predicate offense for wiretap authorization. Judge Sullivan’s decision in the Goffer defendants’ case isn’t a big surprise, given Judge Holwell’s prior ruling, but it’s an important win for the government, which has relied extensively on wiretaps in its hedge fund insider trading probe. Prosecutors also seem to have changed their charging strategy in the wake of the Rajaratnam and Goffer challenges to wiretap evidence. The Goffer defendants, like Rajaratnam, were charged only with conspiracy to commit securities fraud and securities fraud, and not with the predicate act of wire fraud. But the more recently charged hedge fund insider trading defendants (here’s our list, along with their counsel) have been charged with wire fraud as well as securities fraud counts. Did prosecutors bring the wire fraud charges to preclude defense motions to suppress wiretap evidence? “That’s exactly why,” Hoffman told us. We left a message Monday with a lawyer for Zvi Goffer, Cynthia Monaco ofAnderson Kill & Olick, who signed the defendants’ joint motion to suppressthe wiretap evidence, but we didn’t hear back. According to Bloomberg, Monaco said after the hearing that some of the defendants may enter guilty pleas before the case reaches trial in May.

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