* Moffat’s calls recorded by FBI
* Left IBM following arrest and charges last October
* Would be 11th to plead guilty in sprawling probe (Adds details of charges against Moffat, background)
NEW YORK, March 23 (Reuters) - Robert Moffat, a former senior executive of International Business Machines Corp IBM.N, is expected to plead guilty to charges in the Galleon hedge fund insider trading case, according to a court document filed on Tuesday.
Moffat, who was arrested and charged with fraud last Oct. 16 along with principal defendants Galleon founder Raj Rajaratnam and former New Castle Funds LLC trader Danielle Chiesi, would be the 11th person to plead guilty in the case prosecutors have described as the biggest hedge fund insider trading probe in the United States.
Moffat, 53, was the senior vice president of IBM’s systems and technology group and once seen as a possible candidate for the IBM chief executive job. He was placed on leave on Oct. 19 and is no longer with the company, IBM said. [ID:nN3085727]
“The United States Attorney’s Office will file an information upon the defendant’s waiver of indictment,” said the filing in Manhattan federal court by prosecutors.
An “information,” or criminal information, is an alternative charging document to an indictment and usually indicates the defendant has agreed to plead guilty. Ten other defendants in the case have so far waived indictment and pleaded guilty to a criminal information.
Moffat’s attorney, Kerry Lawrence, confirmed that his client was prepared to waive indictment but he declined any further comment. No date has been scheduled yet for a court appearance.
When Moffat was arrested last October, prosecutors alleged that during phone calls intercepted by the FBI, Chiesi obtained non-public information concerning Advanced Micro Devices AMD.N from Moffat and Rajaratnam, and shared that information with New Castle director Mark Kurland. Kurland has pleaded guilty.
Prosecutors said that in August 2008, Chiesi and Moffat discussed a confidential business transaction that AMD was negotiating with investors from Abu Dhabi. Moffat allegedly had access to inside information concerning the deal because as part of the transaction, IBM would be granting a license to an entity to be spun off by AMD.
Toward the end of the call, according to the complaint, Chiesi asked about the timing of the deal involving AMD, and Moffat replied, “six to eight weeks from my meeting.”
When asked the chances that the deal would fall through, Moffat replied, “Zero..., I see no way that it doesn’t get done.”
Rajaratnam and Chiesi have pleaded not guilty and their criminal trial is scheduled to start on Oct. 25, although both have since requested separate trials.
Much of the evidence against 21 accused executives, traders and lawyers was gathered using wiretaps and cooperators.
Eight people, some of them Rajaratnam’s former friends and business associates or onetime Galleon employees, have signed cooperation agreements with federal prosecutors and may be called upon to testify at criminal trials.
Also on Tuesday, a U.S. appeals court in New York heard arguments over wiretap evidence in the civil fraud case brought by the U.S. Securities and Exchange Commission. [ID:nN23242019]
The appellate panel expressed skepticism over whether Rajaratnam must turn over recordings to the SEC until a court decides on Rajaratnam’s bid to suppress them.
The case is USA v Robert Moffat, U.S. District Court for the Southern District of New York, No. 09-mj-02307. The appellate case is SEC v. Galleon Management et al, U.S. Court of Appeals for the Second Circuit, No. 10-0462. (Reporting by Grant McCool; Editing by Tim Dobbyn)
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