White-Collar Crime

An Evening With Preet Bharara

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Last week I attended an interesting talk by Preet Bharara, currently serving as the U.S. Attorney for the (extremely powerful and prestigious) Southern District of New York. I had heard great things about Bharara from many people, including current and former colleagues in the U.S. Attorney’s office and people who previously worked with him on Capitol Hill, where he served as chief counsel to Senator Chuck Schumer. So I was eager to hear his remarks, which he delivered to the New York Financial Writers Association, a group of business and finance journalists here in New York.

Here’s my report on what he had to say — including, for those of you who aspire to be assistant U.S. attorneys, what he expects from the prosecutors who work for him….

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Quote of the Day: Good Question

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We all wanted to give Raj the benefit of the doubt. I wanted to believe he was an honest man. How could someone so smart and rich already be involved in something so horrendous?

– Leila Gonzalez Gorman, a 44-year-old teacher from Westchester County, who served on the jury that found Raj Rajaratnam guilty of insider trading and conspiracy.

(According to the Wall Street Journal, Rajaratnam “is estimated to have paid as much as $40 million for his defense… about two-thirds of the amount prosecutors said [his Galleon Group hedge fund] made from the insider trading addressed in the charges.”)

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Breaking: Raj Rajaratnam Found Guilty

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Raj Rajaratnam

Raj Rajaratnam, the billionaire leader of the Galleon Group, has been found guilty.

The jury returned a verdict of guilty on all 14 counts Rajaratnam was facing — nine counts of insider trading and five of conspiracy. Rajaratnam could get a sentence of up to 19 and a half years under the federal sentencing guidelines, according to prosecutors.

Rajaratnam’s defense lawyer, John Dowd of Akin Gump, is a renowned advocate — but he’s not a miracle worker. Raj was just too big a target.

Check out our sister site Dealbreaker for continuing coverage.

Raj Rajaratnam Found Guilty [Dealbreaker]
Galleon’s Rajaratnam Found Guilty [Dealbook]

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Back to Square One for the Raj Rajaratnam Jury

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After seven days of deliberations, one juror in the insider trading trial of Raj Rajaratnam has been dismissed, for unspecified medical reasons. An alternate has been seated, but this means the jury has to begin its deliberations anew. The original jurors must be thrilled.

Let’s hope that the dismissed juror was a holdout (either way). The suspense is killing us!

Readers: Any predictions on how this will turn out? Will celebrated criminal defense lawyer John Dowd — who successfully represented the fabulous Monica Goodling, among others — pull this off? Or will the prosecutors of the legendary S.D.N.Y. get their man?

Did Raj Rajaratnam Rub His Athlete’s Foot All Over A Just Dismissed Juror? [Dealbreaker]
Rajaratnam Trial, Take 2 [WSJ Law Blog]

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Matt Kluger, Ex-Biglaw Associate Charged With Insider Trading, Is A Gay Dad — and Once Sued Fried Frank Over It

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Matthew Kluger aka Big Gay Matt

“Aww, Matt, why do you have to go around giving us a bad name?”

Ever since Matthew Kluger was charged in a massive insider trading case, involving an alleged conspiracy that spanned 17 years and generated more than $32 million in profit, the foregoing question could be asked by many groups: Cornell grads, NYU law grads, Cravath lawyers, Skadden lawyers, and Wilson Sonsini lawyers.

Tonight we can add more groups to the list: Fried Frank lawyers, and gays — specifically, gay dads.

As reported by the Wall Street Journal earlier tonight, Matt Kluger worked at yet another major law firm: Fried Frank. After he was fired by the firm in 2002, he sued, claiming that partners there discriminated against him because he’s gay — and a father of three, with parenting responsibilities.

Just when you thought this case couldn’t get any weirder, it just did. Matthew Kluger is gay. And a dad. With three kids. Thanks for sending America such a positive image of LGBT parents, Matt!

Let’s take a closer look at Kluger’s suit against Fried Frank — and additional details about Matt Kluger’s complicated personal life, gleaned from ATL tipsters….

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Morning Docket: 04.07.11

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Jeff Skilling

* Former Enron CEO Jeffrey Skilling’s appeal was denied by the Fifth Circuit. While he remains the smartest guy in the room, the room consists of him and a half-wit cellmate whose only discernible talent is making Prune-o. [WSJ Law Blog]

* Bruce Fein, an attorney who worked on Clinton’s impeachment and called for Bush’s impeachment as well, has drafted articles of impeachment for Barack Obama. His high crime and misdemeanor? Time theft. [Politico]

* An Ohio man has been charged with a misdemeanor for barking at a police dog. When asked why he was barking at the female dog, the man calmly replied, “Bitch owes me money.” [CBS News]

Raj Rajaratnam

* The government rested its case in the Raj Rajaratnam trial yesterday. Of additional note is the fact that Rajabba sits ten feet behind his defense table, partially obstructed from the jury box. You can’t completely block Rajabba from view. You can only wish to contain him. [New York Times]

* The government has warned attorneys for former Madoff employees not to use money that might be associated with Madoff’s Ponzi scheme. That includes, for their own health, any ass pennies. [ABA Journal]

* The Fourth Circuit rules in favor of a pundit-professor, in a case about the free speech rights of faculty members at public universities. [Chronicle of Higher Education]

* Charlie Sheen is trying to trademark his catchphrases now. He’s overexposed like a frostbitten penis — is there anything funny left to say about him at this point? (We might try; check in later.) [Forbes]

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Ex-Associate at Three Top Firms Charged With Massive Insider Trading

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Matthew Kluger

There’s no contest today for Lawyer of the Day honors. The clear winner is Matthew Kluger, a former associate at three leading law firms, who has been charged in a massive insider trading case. Kluger stands accused of reaping more than $32 million in profit over the course of a 17-year conspiracy, which also allegedly involved a trader, Garrett Bauer. (Kluger and Bauer might not be as big as Raj Rajaratnam, who’s pretty hefty, but their supposed scheme is nothing to scoff at.)

The charges were filed by Paul Fishman, U.S. Attorney for New Jersey (disclosure: my former office). Fishman claims that Matt Kluger passed along insider information that eventually made its way, via an unnamed co-conspirator, to Garrett Bauer, who traded on it. According to the complaint, Kluger and Bauer invested more than $109 million in the scheme, which yielded profits of more than $32.2 million.

Where did Kluger allegedly obtain the inside information? From the three Biglaw firms where he once worked on M&A deals….

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Non-Sequiturs: 03.09.11

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How can you be a happy lawyer?

* Is concern for “privacy” simply a justification for censorship on the internet? Some thoughts from a lawyer for Google. [Peter Fleischer: Privacy...? via Kashmir Hill / Forbes]

* What’s the secret to lawyer happiness? And no, it doesn’t involve illegal drugs or porn stars (Charlie Sheen isn’t a lawyer). [Slaw via Legal Blog Watch]

* Want to start your own law blog? Read this interesting interview with BL1Y (a regular in the ATL comments section). [Lawyerist]

* Superstar criminal defense lawyer John Dowd, the Akin Gump partner who successfully got Monica Goodling (among many other clients) out of legal trouble, offered a rousing defense of Raj Rajaratnam today. [Dealbreaker]

Jonathan Bristol

* Ex-Winston & Strawn partner Jonathan Bristol, former counsel to money manager / fraudster Kenneth Starr, has reached a plea agreement with S.D.N.Y. prosecutors. [New York Law Journal via Summary Judgments]

* Elsewhere in Ken Starr news, it seems that some celebs are getting hit with IRS tax liens as a result of their ties to him. [TaxProf Blog]

* Congratulations to a 3L at Harvard Law School, Nneka Ukpai, who trounced the prosecution at trial and won an acquittal for her client. [Yolanda Young / On Being a Black Lawyer]

* Congratulations to a 3L at NYU Law and future S.D.N.Y. law clerk, Eli Northrup, who belongs to a hip-hop band called Pants Velour — which has, in the words of our tipster, “captured the magic of Charlie Sheen as only music can.” [YouTube]

* This week, A Round Tuit includes a nice round-up of opinions on the Supreme Court’s recent ruling in the Westboro Baptist Church case (Snyder v. Phelps). [Infamy or Praise]

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A $7.2 Billion Settlement Generates Money for Madoff Victims

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Irving Picard

Rack up another win for trustee Irving Picard, the partner at Baker Hostetler who’s cleaning up the Bernard Madoff mess. On Friday, Picard and Preet Bharara, the headline-making U.S. attorney for the Southern District of New York, announced a $7.2 billion settlement with the estate of Jeffry Picower (no it’s not spelled “Jeffrey”).

Picower, a successful investor and prominent philanthropist, earned billions — both real, through investing with Goldman Sachs, and fictional, through investing with Madoff — before he died in October 2009. Picower was found dead in the swimming pool of his home in Palm Beach, apparently after suffering a heart attack (a plot device familiar to viewers of Brothers & Sisters and The OC). If he had held on until January 2010, Picower would have avoided the estate tax.

Of the $7.2 billion settlement, $5 billion will go to Picard, to settle the complaint he filed against Picower in bankruptcy court, and $2.2 billion will go to the Department of Justice — the largest civil forfeiture payment in U.S. history. All of this money will eventually find its way to qualifying Madoff victims.

Based on monies collected to date, what kind of recovery might Madoff’s victims be looking at?

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Lawyer of the Day: Jonathan Bristol, Winston Partner Turned Accused Fraudster

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Back in June, we wrote about an amusing effort by Winston & Strawn to rewrite history. The firm edited an historical press release to omit all mention of sketchy lawyer Jonathan Bristol, who joined Winston as a partner from Thelen.

Now Winston has even more reason to be embarrassed by its former partner. Earlier today, Jonathan Bristol was both sued by the SEC, for aiding and abetting fraud, and arrested on federal criminal charges, for money laundering. The civil suit and criminal charges arose out of Bristol’s legal work for Kenneth Starr — no, not the former Whitewater independent counsel, but the money manager to the stars who stole money from his celebrity clients.

(Interestingly enough, Ken Starr the fraudster — he’s pleaded guilty, so no need for “alleged” here — is also a lawyer. He graduated from Brooklyn Law School.)

The indictment against Jonathan Bristol, brought by prosecutors in the Southern District of New York, has some juicy details. For example: How much did Bristol earn while at Winston?

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