Judge allows wire taps in Galleon-related case

NEW YORK (Reuters) - A federal judge denied on Wednesday a former Galleon Group hedge fund trader’s request to suppress wiretap evidence obtained by the government in its probe of an insider-trading ring.

Craig Drimal (R) and an unidentified woman leave the Manhattan Federal Court house, after he was released on bail for his involvement in an alleged insider-trading ring, in New York November 5, 2009. REUTERS/Brendan McDermid

Craig Drimal had argued that, while federal agents were investigating his alleged involvement in insider trading, they improperly listened to telephone calls he had with his wife in violation of the federal wiretap statute.

In a 10-page ruling, U.S. District Judge Richard Sullivan criticized the government for failing to stop listening to phone calls that were privileged or not pertinent. But he concluded the incidents did not justify suppression.

“Given the wiretap’s scope and the substantial manpower needed to sustain it, the Court concludes that, on the whole, the wiretap was professionally conducted and generally well-executed,” Sullivan wrote.

Drimal is one of five defendants in an insider-trading case that is scheduled to go to trial next month. The case grew out of the same investigation that led to charges against Galleon Group founder Raj Rajaratnam, whose trial on insider-trading charges is concluding in New York federal court.

“This litigation prompted the U.S. Attorneys’ Office to review its wiretap procedures,” said JaneAnne Murray, Drimal’s attorney. “Hopefully, the deeply troubling privacy intrusion Sullivan found here will not occur again.”

A spokesperson for the Manhattan U.S. attorney’s office declined to comment.


Sullivan’s ruling is another win for the government in its use of wiretap evidence in insider-trading cases. Last November, U.S. Judge Richard Holwell denied a request by Rajaratanam to throw out wiretap evidence against him, the backbone of the government case.

Federal agents monitored Drimal’s phone for two 30-day periods from November 16, 2007, to December 15, 2007, and December 17, 2007, to January 15, 2008. During those periods, Judge Sullivan found the government improperly listened to several phone conversations that were not pertinent to the investigation. He noted that, in one call, an agent “monitored almost four minutes of a 6 1/2-minute call while Drimal and his wife had a deeply personal and intimate discussion about their marriage.”

But Sullivan noted the government’s failures occurred early on in the wiretap, “when agents were presumably still learning to recognize the voices of Drimal’s interlocutors as well as identify their patterns of conversation.” As the wiretap progressed, federal agents quickly stopped listening to conversations between Drimal and his wife, he wrote.

“Having reviewed the wiretap in its entirety, the Court is persuaded that in the vast majority of calls the government’s monitoring of the Drimals’ spousal communications was reasonable,” Sullivan wrote.

The case is U.S. v. Goffer, et al, United States District Court, Southern District of New York, No: 1:10cr-56.

Reporting by Andrew Longstreth; editing by Andre Grenon