In Gupta, jurors saw the American Dream and convicted anyway

Convicted of one count of conspiracy and three counts of securities fraud

Rajat Gupta, former Goldman Sachs Inc. director, center, and his lawyer Gary Naftalis, right, exit federal court in New York. Rajat Gupta, former Goldman Sachs Inc. director, center, and his lawyer Gary Naftalis, right, exit federal court in New York.

June 15 (Bloomberg) -- Jury foreman Richard Lepkowski didn’t want to convict Rajat Gupta of insider trading. To him and other jurors, Gupta had lived a “story-book life” and “the American dream,” he said. In the end, though, the case was just too strong.

“I wanted to believe the allegations weren’t true,” Lepkowski, 51, said in an interview today in Manhattan federal court. “Here was a man who came to this country and was a wonderful example of the American Dream.”

“But at the end of the day, those allegations on which we found guilt -- the evidence was overwhelming,” said Lepkowski, a resident of Westchester County, New York, and an executive at the nonprofit Children’s Tumor Foundation.

Gupta, orphaned as a teenager in India, rose to become managing partner of McKinsey & Co. and a director at Goldman Sachs Group Inc. and Procter & Gamble Co. Today, he became the most prominent executive to be convicted in a five-year U.S. crackdown on insider trading at hedge funds.

Jurors weighed the evidence for 9 1/2 hours over parts of two days before convicting Gupta of one count of conspiracy and three counts of securities fraud, the maximum sentence for which is 20 years in prison. They acquitted him of two counts of securities fraud. The trial lasted four weeks.

Two in Tears

When the 12 jurors returned to the courtroom to deliver their verdict at 11:38 a.m., two were in tears.

“I struggled, I’ll be honest with you,” said Ronnie Sesso, 53, a youth advocate who works for New York City’s Administration of Children’s Services, who said she, too, had become emotional in rendering her decision. “I was trying to determine the outcome of this person’s life.”

The verdict came much faster than it did last year in the U.S. case against Galleon Group LLC co-founder Raj Rajaratnam. Then, jurors deliberated for 12 days before convicting Rajaratnam of securities fraud for trading on illegal tips from Gupta and others.

Still, the Gupta jurors said they wrestled with many issues before filing into the courtroom for the last time.

“It’s hard,” said Agnes Sanders, a retired librarian from Manhattan who declined further comment. “I’m sure we reached the right verdict, but it’s hard.”

Many Successes

A constant theme in the deliberations was Gupta’s reputation for integrity and his successes over the course of his life, according to one juror who asked not to be named. Wherever possible, jurors gave Gupta, 63, the benefit of the doubt. They appreciated the passion of the lawyers on both sides, the juror said.

After seven hours of deliberations on the first day, jurors returned to court today not knowing if they’d reach a final verdict by the end of the day, the juror said. It all came together in the morning, and by 11:30 a.m. they had a verdict. Every juror was emotional, the juror said.

Lepkowski and Sesso said a central concern for jurors was motive. The panel discussed why Gupta, who a prosecution witness testified had a net worth of $80 million and had led a stellar business career, would leak tips to Rajaratnam. One reason, they concluded, was that Gupta wanted Rajaratnam’s help building his private equity fund, New Silk Route.

‘Need for Greed’

“What did Mr. Gupta get out of this by giving Mr. Rajaratnam the information? Was it the future, was it cash?” Sesso said. Ultimately, Sesso pointed to Gupta’s “need for greed: ‘I could get away with it once and I’ll do it again,’” she said.

The jurors said Gupta was manipulated by Rajaratnam, who is serving an 11-year prison sentence. Sesso and Lepkowski cited the testimony of Gupta’s former McKinsey protege, Anil Kumar, who pleaded guilty and testified against Gupta. Lepkowski said he found parallels between the way Kumar had been co-opted by Rajaratnam into passing inside information about technology firms he was advising and what happened with Gupta.

“He manipulated Rajat Gupta and Mr. Kumar,” Lepkowski said. “What happened to him almost imitated what happened to Gupta. You can see him playing one off the other.”

Both jurors said they came away with a low opinion of Rajaratnam, who was convicted of making millions of dollars off tips in separate schemes. Sesso called the convicted fund manager “a snake in the grass.”

Next page: Manipulative Man

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