Andrew Burton/ReutersRajat K. Gupta, center, a former Goldman director, and his lawyer, Gary P. Naftalis, right, arrive at federal court in Manhattan.The pair of government witnesses who testified on Friday at Rajat K. Gupta’s insider trading trial were from opposite ends of the business world.
On one end, there was Bill George, the former chief executive of the medical device giant Medtronic, a director at Goldman Sachs and Exxon Mobil and a professor at Harvard Business School. On the other was Michael Cardillo, a former junior employee at the Galleon Group hedge fund who has already pleaded guilty to participating in a vast insider trading conspiracy.
Prosecutors put both men on the witness stand in their case against Mr. Gupta, a former director of Goldman and Procter & Gamble accused of leaking confidential information about those companies to Raj Rajaratnam, the former head of Galleon, who is now in prison for insider trading.
The jury trial, at Federal District Court in Manhattan before Judge Jed S. Rakoff, is expected to last about three weeks.
Its first week ended with a whimper. Friday’s testimony was mostly devoid of drama, as the session was filled with lengthy sidebars between the judge, prosecution and defense sparring over legal issues outside the earshot of the jury and courtroom spectators. Those spectators each day have included two full rows of Mr. Gupta’s family and friends.
Mr. George’s testimony, delivered in his flat Midwestern accent, consisted largely of a prosecutor painstakingly walking him through minutes of Goldman board meetings and presentations made to the directors during 2008. Prosecutors say that Mr. Gupta called his friend and business associate Mr. Rajaratnam after several of those board meetings and illegally tipped him off about Goldman news before it was made public.
Among the more interesting pieces of evidence admitted during Mr. George’s testimony was an e-mail that Mr. Gupta sent Mr. George in September 2007. That year, Mr. Gupta and Mr. Rajaratnam helped start New Silk Route, a private equity fund focused on investments in Asia. Mr. Gupta e-mailed Mr. George, his fellow Goldman director, pitching him on the fund.
“Bill, I don’t know whether New Silk Route is a good fit with your investment portfolio, but I thought some Indian and Asia exposure may be good,” Mr. Gupta wrote. “It would be a privilege to have you as an investor, and I hope you will consider it seriously. I will follow up with you next week at the Goldman board meeting.”
Mr. George, 69, said he declined to to invest. The government used the e-mail and an attached PowerPoint presentation on New Silk Route to demonstrate the close business ties between Mr. Gupta and Mr. Rajaratnam
Michael Cardillo, a tall and athletic-looking 35-year-old, has been cooperating with the government since November 2009, just a month after Mr. Rajaratnam’s arrest, when F.B.I. agents approached him in the lobby of his apartment building.
A product of Middle Village,Queens, Mr. Cardillo described his career ascent at Galleon, beginning as a $40,000-a-year back-office clerk and ending as a portfolio manager overseeing $125 million. He also discussed a profitable trade that he made in Procter & Gamble. In December 2008, he said his colleague R.K. Rajaratnam, the brother of Raj Rajaratnam, told him that Procter & Gamble was going to announce a drop in its organic sales growth.
Mr. Cardillo said that R.K. Rajaratnam told him and at least one other colleague that he knew this because he was hearing it from his brother’s friend on the Procter & Gamble. board. They all shorted Procter & Gamble stock, betting that its price would drop. The next day, Procter & Gamble announced the sales decline, and its shares sank.
“Do you remember whether you made a lot of money?” a prosecutor asked Mr. Cardillo.
“I remember making a lot of money,” Mr. Cardillo said.