Imprisoned hedge fund founder Raj Rajaratnam is seeking reversal of his conviction on insider trading charges, arguing that the government mislead the court by providing "misrepresentations and material omissions" in seeking permission to wiretap his phones to build its case against him.
Rajaratnam's appeal against his conviction comes a day after a federal judge sentenced his friend and business associate Indian-American Rajat Gupta to two years imprisonment for leaking boardroom secrets to him.
The Sri Lankan is currently serving an 11 year prison term after being convicted last year of running one of the biggest insider trading scams in US history.
A ruling on Rajaratnam's appeal is expected in the next few months.
His lawyer Patricia Millett told a panel of federal appeals court judges here yesterday that the government violated his constitutional right to privacy and federal law on wiretaps by providing incomplete information to authorising judge Gerard Lynch in seeking permission to wiretap his phones.
Rajaratnam's lawyers said the government made a "long pattern of falsities, misleading misrepresentations and material omissions" to Lynch, a district court judge in 2008, when it sought authorisation to wiretap his mobile phone.
Millett said the law requires that federal authorities should first exhaust all other conventional investigative procedures, like interviewing witnesses and reviewing documents, before seeking authorization to secretly record telephone conversations.
The government has to prove that it tried all other options to collect information against a defendant but failed before it is allowed the use of wiretaps.
Millett said the government had failed to disclose to Lynch that the Securities and Exchange Commission was conducting a parallel civil investigation against Rajaratnam for over a year on insider trading.
This lack of disclosure showed a "reckless disregard for the truth" and had misled Lynch in making his decision.
Millett asked the appeals court to suppress the wiretaps that prosecutors had used at Rajaratnam's trial, a move that could mean the government would have to retry Rajaratnam without the dozens of phone calls in which he is heard swapping confidential information about publicly traded companies.
The FBI had recorded more than 2,000 calls between
Rajaratnam and 130 business associates, friends and family over nine months.
The government used that evidence to build its case against him and won his conviction after a two-month jury trial in May last year.