Raj Rajaratnam's Public Relations Offensive

When federal authorities want to put you in prison, it helps to be a billionaire with the resources to fight them at every turn. Quite apart from the millions that you can spend on your legal defense team, there is all the money you can spend on trying to prevail in the court of public opinion. 

Martha Stewart lavished a fortune on a PR war when the feds came after her for insider trading. She established a website proclaiming her innocence and hired first-tier flacks to try to influence media coverage of the case. It may well have been her faith in her legal and PR efforts that convinced her to turn down a plea bargain that would have kept her out of prison. Rich business people have learned to think that experts can solve any complex problem.

Now billionaire Raj Rajaratnam seems to be going down a similar path, although the charges against him are more serious. Rajaratnam has refused to settle for a plea bargain even as 14 people in the Galleon Group case have already struck deals with prosecutors.

Beyond his top notch team, Rajaratnam has a significant PR effort under way. Visit www.rajdefense.org and you'll see what I mean. You will find a blizzard of press releases aimed at presenting Rajaratnam's viewpoint at every turn in the case. There are also interviews with experts calling into question the government's approach, as well as photos of a friendly Rajaratnam available for download. (You can see one right in this post!) You can even follow the site on Twitter. Oh, and the Rajaratnam PR team has spent a fair amount of energy hammering away at the media for misreporting on the case -- complaints that are filed under a page titled "Media Accountability." 

A group called Counterpoint Strategies seems to be coordinating this battle. I can't imagine they come cheap. 

Will Rajaratnam Plead Guilty?

Federal efforts to convict Galleon Group founder Raj Rajaratnam of insider trading got a big boost yesterday when a judge ruled that prosecutors could present what they say is extensive against Rajaratnam based on wiretapped conversations. Lawyers for the fallen hedge star had tried to block this evidence. As the Wall Street Journal wrote:

Mr. Rajaratnam has argued in part that the wiretaps were improperly obtained and were unnecessary because of an existing civil probe by the Securities and Exchange Commission.

"While the SEC investigation used conventional techniques and was the bedrock of the prosecutor's own criminal investigation, the SEC investigation had nevertheless failed to fully uncover the scope of Mr. Rajaratnam's alleged insider-trading ring and was reasonably unlikely to do so because evidence suggested that Rajaratnam and others conducted their scheme by telephone," U.S. District Judge Richard J. Holwell wrote in an opinion Wednesday.

All this now raises the question of whether Rajaratnam will plead guilty in the case to avoid a long trial and a stiffer sentence. As the New York Times noted:

Criminal defense lawyers uninvolved in the case say the ruling could lead Mr. Rajaratnam to plead guilty.

“If you’re the prosecutor where you’ve won a major motion that allows you to use what you believe is substantial incriminating evidence, you have a candid conversation with the defense and give them a short window to negotiate a plea before turning your attention to preparing for trial,” said Glenn Colton, a criminal defense lawyer at SNR Denton in New York.