New York, March 23 (IANS) A former Indian American Intel executive has testified that he shared confidential information about the chipmaker with hedge fund tycoon Raj Rajaratnam because "we were very good friends."
Testifying in the biggest US insider trading case in a New York court Tuesday, Rajiv Goel said he told his former Wharton School of Business classmate Rajaratnam about a decision by Intel to invest up to $1 billion in a joint venture by Sprint Nextel and Clearwire.
Prosecutors say Goel, 52, and Sri Lankan born Galleon Group hedge fund founder Rajaratnam, 53, were caught on a wiretap discussing a closed-door meeting in 2008 of the Intel board of directors.
Rajaratnam has pleaded not guilty to charges he made millions trading illegally on secrets. Nineteen others have pleaded guilty. Some are cooperating, including Goel, who pleaded guilty in the case in February 2010.
Goel is also expected to testify about trades in stock of outsourcing firm PeopleSupport Inc. that Rajaratnam allegedly made based on information he gave the defendant about an acquisition of the company by an Indian conglomerate.
Goel told the court about three ways that Rajaratnam helped him financially. First, Rajaratnam lent him $100,000 in 2005. Then one year later, he gave Goel $500,000 as a gift. "I had never seen so much money," he said about the gift.
The Galleon chief also traded for Goel in his Charles Schwab brokerage account, and earned the former Intel executive between $700,000 - $800,000. One of those trades was 3,500 shares of ATI stock on May 20, 2005.
"There was mystique around wealthy people having Swiss bank accounts, [among] poor people growing up up in India. So I opened an account there and had Rajaratnam transfer the money there," Goel testified.
"Rajaratnam is - was - a very good friend of mine," Goel said. "He was a good man to me. I was a good pal, a good person to him."
Goel said he had met Rajaratnam while studying at the Wharton School in the 1980s. They had stayed in touch over the years, frequently discussing "our worlds" with each other, he said, including their growing families and developing careers.
Goel said Rajaratnam long ago boasted of having "a stellar reputation" for predicting Intel's financial performance because two women at the company were supplying him with information about the company's orders.
To reward them, "he gave them two cars, one to each individual," Goel said.
"He gave them the keys to the car. If I recall correctly, they were BMWs."