Former Intel Exec Goel Pleads Guilty In Galleon Case

By Nick Malinowski

Law360, New York (February 08, 2010) -- A former Intel Corp. executive pled guilty Monday to securities fraud in the massive insider trading case centered on hedge fund billionaire Raj Rajaratnam, which regulators claim involves more than $25 million in ill-gotten gains.

Rajiv Goel — a former director in strategic investments at Intel Capital, the investment arm of the technology giant — told the U.S. District Court for the Southern District of New York that he was guilty of conspiracy and securities fraud.

Goel also agreed to cooperate with the federal government in its case against his associates, according to his attorney, David Zornow of Skadden Arps Slate Meagher & Flom LLP.

“By his plea of guilty today, Rajiv Goel has taken responsibility for his actions and is profoundly sorry,” Zornow said Monday, reading from a prepared statement.

Rajaratnam, the founder of Galleon Group LLC, has denied any wrongdoing in the case, but Goel is the ninth of 21 individuals to plead guilty to civil and criminal allegations in connection with what regulators have called the largest securities fraud of its kind.

The U.S. Securities and Exchange Commission arrested Goel along with Rajaratnam in October and charges them with involvement in an insider trading ring that allegedly cashed in on tips from major hedge funds, publicly traded companies and investor relations firms between January 2006 and July 2007.

Anil Kumar, a director at the global management consulting firm McKinsey & Co. Inc.; Robert Moffat, a senior vice president at IBM Corp.; and Danielle Chiesi and Mark Kurland of New Castle Funds LLC were arrested the same day for their alleged role in the scheme. Others tied to scandal include Zvi Goffer, formerly of Incremental Capital LLC, and two attorneys at Ropes & Gray LLP.

Earlier in February, Goffer and six others pled not guilty to criminal charges.

According to prosecutors, Rajaratnam made millions through several complex schemes by trading on tips from sources inside various companies, including Moody's Investor Services Inc., Polycom Inc., Google Inc., Clearwire Corp., Akamai Technologies Inc. and People Support Inc.

Goel provided Rajaratnam with nonpublic information about Intel's earnings and about pending ventures between Clearwire Corp. and Sprint Nextel Corp., after which Rajaratnam traded on his behalf, according to the complaint.

Goel is represented by Skadden Arps Slate Meagher & Flom LLP and Thompson Hine LLP.

The case is United States v. Goel et al., case number 09-mj-02306, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Evan Weinberger and Brendan Pierson