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* Prosecutors add charges in criminal case
* Civil trial scheduled for Aug. 2
* Defendants have until Feb. 15 to turn over wiretaps (Adds Rajaratnam asks judge to stay wiretap order pending appeal, paragraph 2)
By Grant McCool
NEW YORK, Feb 9 (Reuters) - Additional criminal charges were filed on Tuesday against Galleon hedge fund founder Raj Rajaratnam as prosecutors alleged he and his co-defendant reaped $49 million from illegal insider trading, up from an earlier claim of $40 million.
In the parallel civil case against Rajaratnam and co-defendant Danielle Chiesi, a judge ordered the two defendants to turn over wiretaps to the U.S. Securities and Exchange Commission. In a letter to Manhattan federal court Judge Jed Rakoff on Tuesday night, Rajaratnam's lawyers asked him to stay the order pending an appeal.
Thousands of wiretaps were made in the criminal probe between 2003 and 2009 involving Wall Street and Silicon Valley firms that was announced last October, but lawyers for the defendants and the SEC have been tussling over their use in the parallel civil fraud case.
Rajaratnam, 52, and Chiesi, 44, a former employee of New Castle Funds LLC, were arrested last October and indicted in December on charges of securities fraud and conspiracy in what prosecutors have described as the biggest hedge fund insider trading case in the United States.
The new indictment adds two more counts of securities fraud against Rajaratnam. In a letter to the court on Tuesday, his lawyers said they would ask the judge presiding the criminal case to order a separate trial from Chiesi.
The indictment alleges that Rajaratnam made a total of $45 million and Chiesi $4 million in a wide-ranging scheme that also led to charges against a score of other traders, lawyers or fund managers. Rajaratnam and Chiesi face possible prison sentences of up to 20 years if convicted.
They pleaded not guilty to the original indictment. The next hearing is scheduled for Feb. 11.
"Mr. Rajaratnam is innocent and looks forward to his day in court when a jury of his fellow citizens will examine and evaluate all of the evidence," his lawyer, John Dowd, said in a statement.
Chiesi's lawyer Alan Kaufman said the superseding indictment "has nothing new with regard to the allegations against my client."
Separately on Tuesday, Rakoff ruled that Rajaratnam and Chiesi, who are fighting to keep the wiretap evidence out of both criminal and civil cases, must provide the SEC with recordings they received from criminal prosecutors by Feb. 15.
"The notion that only one party to a litigation should have access to some of the most important non-privileged evidence bearing directly on the case runs counter to basic principles of civil discovery in an adversary system," Rakoff's written order said.
While the SEC and criminal prosecutors often coordinate with each other, there are limits under the law on the information they can share in parallel civil and criminal cases, which is why the defense was ordered to provide the material and not the prosecutors.
"We are obviously disappointed and respectfully disagree with the ruling," Chiesi's lawyer Kaufman said.
In the wider insider trading probe, 21 people have been criminally or civilly charged. Nine have pleaded guilty. Eight of those are cooperating with the government's investigation, including two longtime friends of Rajaratnam, former McKinsey & Co executive Anil Kumar and Rajiv Goel, a former director of the treasury group at Intel Capital, the investment arm of Inel Corp.
"Rajaratnam, Chiesi and others repeatedly traded on material, nonpublic information pertaining to upcoming earnings forecasts, mergers, acquisitions, or other business combinations," the office of the Manhattan U.S. Attorney said in a statement on Tuesday.
It said the superseding indictment charges trading based on inside information in Intel Corp (INTC.O), International Business Machines Corp (IBM.N), Akamai Technologies Inc (AKAM.O), Polycom Inc PLCM.O, Hilton Hotels Corp HLNQ.PK, Google Inc (GOOG.O), Sun Microsystems Inc SUNW.TI, Clearwire Corp CLWR.O, Advanced Micro Devices AMD.N, ATI Technologies Inc and eBay Inc (EBAY.O) Inc.
The cases are USA v Raj Rajaratnam and Danielle Chiesi, U.S. District Court for the Southern District of New York, No. 09-01184 and SEC v Galleon Management LP et al 09-cv-08811. (Reporting by Grant McCool and Jonathan Stempel; editing by Gary Hill)