Heard but hardly seen, Danielle Chiesi, a former hedge fund trader and ex-beauty queen, has stolen the spotlight in the government’s insider trading case against Raj Rajaratnam.
Over the past five weeks, jurors listening to the government’s evidence against Mr Rajaratnam have heard dozens of recorded phone conversations between the founder of the Galleon Group hedge fund and his male friends and colleagues.
Yet the most striking voice is that of Ms Chiesi, a former Bear Stearns hedge fund trader who pleaded guilty earlier this year to insider trading. Her voice, inflected with a New York accent, has been broadcast into the courtroom, describing trading strategies with Mr Rajaratnam and doling out company secrets, which prosecutors allege she obtained from senior executives at technology groups Advanced Micro Devices and IBM.
She does not bother to disguise the names of these companies in the phone calls, which were secretly recorded by the Federal Bureau of Investigation as part of its probe into Galleon. Prosecutors have relied heavily on the recorded calls in building their case against Mr Rajaratnam, who is accused of reaping $63m in illegal trading profits or averted losses.
Ms Chiesi, the only female voice on the calls, is brash and blunt. Before the judge allowed prosecutors to play certain recordings, he edited out what a prosecutor referred to as “blue” language – a show business term for comedians whose acts contain sexually explicit content.
Though her voice is familiar, the jury has only had a single glimpse of Ms Chiesi, from a photograph of her that prosecutors have affixed to a board. In the picture her platinum hair is swept into a loose bun with her head tilted to the side. In the calls Ms Chiesi flaunts her contacts in the upper echelons of corporate America. She mentioned “Hector” when discussing Hector Ruiz, the former chief executive of AMD, and Robert Moffat, a senior IBM executive, who she said had visited her mother’s house one Sunday.
Anil Kumar, a former McKinsey consultancy director, testified during the trial that Ms Chiesi had “intimate” relationships with Mr Moffat and Mr Ruiz.
Mr Moffat has pleaded guilty and Mr Ruiz has not been charged with any wrongdoing. Andy Merrill, a spokesman for Mr Ruiz, has previously said: “Any suggestion that the relationship was intimate is untrue.”
On the recorded calls, Ms Chiesi calls her friends “baby”. On one call she tells Mr Rajaratnam that Akamai, an internet infrastructure group, is “gonna guide down. I just got a call from my guy. I played him like a finely tuned piano”. She begs the Galleon boss to hold off trading so she can make the trade.
Prosecutors allege Ms Chiesi was tipped off by Kieran Taylor, a former Akamai marketing executive and friend of the Chiesi family. Mr Taylor has not been charged with any wrongdoing. Mr Rajaratnam made $5m in profits from the sale, while Ms Chiesi made $2.4m in profits. After receiving the tip, she said she felt like a “warrior” and the information grab was a “conquest”.
But “Dani”, as she is known, also seems to seek out Mr Rajaratnam’s advice. “I’m a chick in this business with a reputation of knowing AMD and IBM. So what would you tell me to do?” she asks him on one call. Mr Rajaratnam tells her, “I would trade. I mean I would sell 250, buy 250, you know.” Another time she asks him whether she should create a trading pattern in a stock.
Mr Rajaratnam also told her to be “radio silent” about IBM and Akamai to avoid any suspicion.
Ms Chiesi is scheduled to be sentenced next month. Her lawyer has said she is not co-operating with the government, never traded in her personal account, and was never asked to testify against Mr Rajaratnam.
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