Former Intel Executive Testifies In Galleon Founder's Insider Trading Trial

The Wall Street Journal reported that Goel took the witness stand Tuesday to testify against Rajaratnam in the hedge-fund insider trading trial involving major financial and technology firms including Intel and AMD.

The prosecution said Goel sold the information to Rajaratnam on March 24, 2008, two days before reports emerged of Intel’s $1 billion investment in a 4G/WiMax venture between Clearwire and Sprint Nextel that was officially unveiled on May 7, 2008. Prosecutors earlier this week played tapes of three conversations that the FBI secretly recorded between Goel and Rajaratnam, in which Goel confirmed that Intel’s board had approved the deal.

Goel testified that he became aware of the Clearwire deal as well as details of Intel’s April 2007 earnings announcement, which he also allegedly leaked to Rajaratnam, through other Intel executives. Prosecutors say Rajaratnam bought 125,800 shares of Clearwire stock and made a profit of $700,000 to $800,000 from the Clearwire leak, part of a total $45 million Rajaratnam allegedly made from leaked insider information. Rajaratnam, who says he gathered the information through legitimate research, faces multiple counts of securities fraud and conspiracy.

Goel reportedly testified that he and Rajaratnam were close friends who had studied and vacationed together. Goel said in July 2005 Rajaratnam lent him $100,000, purportedly to help Goel with the payments on his first home, according to the report. Rajaratnam gave Goel $500,000 the following May to help treat Goel’s father in India, Goel reportedly said.

Goel reportedly testified that Rajaratnam claimed to have gained "a stellar reputation" as a result of his accurate forecasts of Intel’s financial performance, which he had bought from two unnamed women at Intel. “He gave them two cars, one to each individual," Mr. Goel reportedly said. "He gave them the keys to the car. If I recall correctly, they were BMWs."

Sriram Viswanathan, a current Intel vice president from whom Goel allegedly received information on the Clearwire transaction, also testified on Tuesday that confidential details about the deal were leaked ahead of the announcement. Viswanathan reportedly testified that Goel would have been dismissed immediately from his position at Intel for discussing the confidential information with Rajaratnam. In fact, Viswanathan reportedly testified, Goel also would not have been authorized to disclose the fact that Intel had held a board meeting about Clearwire.

Goel’s testimony, including the defense’s cross-examination, is expected to continue for the next two to three days.