As Galleon Trial Opens, Prosecutor Blasts Hedge Fund Chief

NEW YORK (AP) — A one-time billionaire hedge fund founder tapped longtime friends who worked for public companies for secrets to earn tens of millions of dollars in illegal profits, a prosecutor told a jury Wednesday at what the government has described as the biggest hedge fund insider trading trial ever.

"Greed and corruption. That's what this case is all about," Assistant U.S. Attorney Jonathan Streeter told the jury in Manhattan at the start of his opening statement.

Raj Rajaratnam traded on secret information "again and again and again" between 2003 and 2009 as he operated a family of hedge funds at his New York-based hedge fund, Galleon Group LLC, Streeter said.

The trial comes more than a year after prosecutors announced that they had raised the stakes in their effort to root out corruption on Wall Street by using wiretaps for the first time on a wide scale to eavesdrop on the private conversations of insiders at public companies and at hedge funds. Too often, they said, those calls revealed insider information being passed around casually.

Rajaratnam has pleaded not guilty to securities fraud and conspiracy to commit securities fraud. The Galleon founder, who has been free on $100 million bail since his October 2008 arrest, stood up briefly as his name was mentioned when jurors entered the room for opening statements.

Defense lawyer John Dowd told the jury "the evidence will show the government has it wrong. And the government has it wrong because it believed the word of unbelievable people."

He said the government "ignored the public record and failed to do its homework."