U.S. sought to prevent the defence of Galleon witness preparation

April 15, 2011, 7: 38 am EDT by David Glovin, Patricia Hurtado, and Bob Van Voris

(Adds background cross-examination at paragraph 18).

April 15 (Bloomberg) - about an hour before prosecutors asked ex-galion Group LLC U.S. President Richard Schutte approximately 25 million in investments, that he has received from Raj Rajaratnam and his family, they seek to prevent Schutte preparation for the issue of the defence lawyers. "It is the cross-examination,"Assistant U.S. Attorney Reed Brodsky said the judge at a Conference of sidebar in the trial of the Rajaratnam insider trading until the Court broke for lunch yesterday." Defence lawyers "should not have the chance to talk to his lawyers who are here in the courtroom and are working closely with him and prepares to start for this."When the trial resumed, Brodsky strewn Schutte questions on whether if Rajaratnam, co-founder of the Galleon, had invested in the funds of Schutte, tails Capital Advisors LLC, seeking to show that the key to the defence witness was biased. Schutte confirmed that Rajaratnam had investments.The confrontation could lead jurors to ignore a large part of the prior of the Schutte testimony if they conclude that defence lawyers were "hiding something" by the investment of the Rajaratnam explaining not earlier in tails, said Anthony Barkowa former Attorney in Manhattan, who heads a centre on criminal law at the University of New York. "" Barkow, it is likely that the defence will challenge the credibility of the witnesses for the Government and perhaps even the prosecutors ", said in a telephone interview. "But when waste you your own credibility like this, it is difficult to attack someone else.".Cross-ExaminationRajaratnam, 53, was found since March 8 in Federal Court in Manhattan in the largest crackdown initiated of hedge funds in the history of the United States. The money born Sri Lankan Manager and co-founder of the Galleon is accused of winning $ 63.8 million of Councils disclosed by insiders and hedge fund traders.He denies wrongdoing, saying: he based his trades on research.A large part of the defence of the Rajaratnam, which began on 11 April, focused on the testimony of Schutte, who works at the Galleon from 2004 until last year and remains a consultant to the hedge fund. Friendly questioned by counsel for the defence, Schutte examined scores of analysts, accounts of news reports and other documents that the Defense says are at the base of the trades of Rajaratnam in Intel Corp., Google Inc., Goldman Sachs Group Inc. and other companies.Schutte testimony ended yesterday.Cross-examination of ResponseOn of the Board of Schutte, Brodsky sought to undermine his testimony showing that Rajaratnam haven't seen research reports, they contain conflicting recommendations and that the trades of the Rajaratnam coinciding with his receipt of the United States's what is inside information.Brodsky concluded his examination by querying Schutte on tails, which Schutte formed last year and manages now $ 35 million. Schutte said the Rajaratnam family has invested $ 15 million in the tails in January and Rajaratnam to $ 10 million in September.The evidence on tails can make it appear as if the Schutte testimony was "purchased"."," Stuart Slotnick, a lawyer of criminal defence with Buchanan Ingersoll & Rooney PC in New York, said in a telephone interview. At the same time, he said, "the jury may say that" this is the mode of works in the industry, and I love him. ". Many of the Government witnesses were people who pleaded guilty of crime. "" "Court of routine and Ordinary'After yesterday, Jim McCarthy, a spokesman for Rajaratnam, said the defence was"well aware"of the investment of the Rajaratnam in tails, deemed"routine and regular ". McCarthy reiterated today that the defence was "well aware of these arrangements to current affairs."Defence lawyers had urged the judge not to allow that the jury to hear evidence of the investment, according to a transcript of a Conference "sidebar" outside the presence of the jury. "" Oppose this as being relevant and much more prejudicial than probative and is likely to confuse and mislead the jury ", defence lawyer Michael Starr told U.S. District Judge Richard Holwell. Another lawyer of the defence, Terence Lynam, asked if the Government can introduce some "actual amounts" Rajaratnam after investment that Holwell said the evidence of the tails of Rajaratnam investment showed "Potential bias" Schutte, and he allowed to come before the jury, prosecutors sought to ensure that the defence has step "talk with Mr. Schutte" during the lunch hour-long break.No Coaching "we did a not talk to the lawyers of the people and their coach through their counsel in cross-examination, Brodsky."They will be.""Lawyers are generally prohibited to talk with their witnesses, the cross-examination of the adversary.The transcript is not clear when prosecutors or defence has learned from the investment of the Rajaratnam in tails. Alison Preece, a spokesman for the Schutte Attorney, Alan Vickery, had no immediate comment. Vickery, said yesterday prosecutors "had to resort to innuendo to try to push the effect" of the testimony of Schutte.Le April 12, the second day of direct testimony of Schutte to Rajaratnam, Starr asked the judge to prosecutors in order to provide an overview of their expected cross-examination. "" I believe that I would say the defence thus, then, they ask all the questions, I will ask, "Brodsky said, according to a transcript of a sidebar Conference date here. "I think that I have very important issues that go to the question of the credibility of the witness".Confidential ShowingBrodsky offered to make a confidential screening at Holwell facts, that he had collected. The judge said that the two parties would discuss it later, as they did yesterday.Summations in case may begin next week. Now his testimony as an expert witness for the defence is Gregg Jarrell, the top Economist of the U.S. Securities and Exchange Commission from 1984 to 1987.The case is U.S. v. Rajaratnam, 1: 09-cr-01184, U.S. District Court, Southern District of New York (Manhattan).

-Editors: Stephen Farr, John Pickering

To contact the reporters on this story: David Glovin Federal Court in Manhattan to glovin@bloomberg.net; Patricia Hurtado in the Federal Court in Manhattan to phurtado@bloomberg.net; Bob Van Voris in Federal Court in Manhattan to the rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha to the mhytha@bloomberg.net

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Abortion, gap U.S. leaders try to prevent the closure of the expenditure

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April 08, 2011, 9:29 AM EDT By Brian Faler and Julianna Goldman

(See EXT6 for more on the U.S. budget.)

April 8 (Bloomberg) -- With hours to go before a threatened U.S. government shutdown, Republican and Democratic leaders remained deadlocked over federal support for Planned Parenthood and other spending as they narrowed their differences over the size of proposed budget cuts.

President Barack Obama called on lawmakers to reach a last- minute deal to avert a government shutdown today. Democratic officials said a dispute over financing for Planned Parenthood, which provides abortions among other services, was preventing an agreement over more than $30 billion in overall spending cuts.

The two sides had agreed on everything but a $300 million cut for Planned Parenthood that House Republicans want included in a budget resolution to carry the government through the rest of the 2011 fiscal year, one Democratic official said today. Republicans said larger spending issues remained as an obstacle to agreement. Another person familiar with the negotiations said the issues agreed upon were less clear than last night.

“The only thing left undone when we left last night was women’s health,” Senate Majority Leader Harry Reid, of Nevada, told reporters at the Capitol today. “We agreed on spending cuts and they’re still not happy.”

Senator Charles Schumer, a New York Democrat, said in an appearance on Bloomberg Television that Republicans and Democrats have narrowed their differences on the size of proposed budget cuts but remain deadlocked over Republican demands on the issue of abortion rights.

“As long as they insist” on what Schumer described as “ideological riders,” he predicted “the government will shut down.”

Michael Steel, a spokesman for House Speaker John Boehner, said today: “While nothing will be decided until everything is decided, the largest issue is still spending cuts.”

After meeting with Boehner and Reid at the White House last night, Obama said he hoped that talks over narrowing differences would lead to a breakthrough preventing a shutdown set to begin at midnight tonight.

“I’m not yet prepared to express wild optimism but I think we are further along,” he told reporters. “My hope is, is that I’ll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted.”

The president canceled a scheduled trip to Indianapolis, where he was to promote his energy policies. He had met with Reid and Boehner earlier yesterday and late on April 6 in an effort to reach an accord.

Shutdown Threatened

Without an agreement on a federal budget to run through the 2011 fiscal year, the government would begin shutting down for the first time in 15 years. Roughly 800,000 “non-essential” federal employees would be furloughed, affecting a host of government services. National parks would close, those filing paper tax returns wouldn’t receive refunds, government permits would be unavailable, and most passport applications would go unprocessed.

Senator Bob Corker, a Tennessee Republican, said he’s confident that differences are “going to get resolved” in time. There’s “no way” the government won’t be open “when the sun comes up Monday,” Corker said on CNBC today. “This whole issue, over the short-term continuing resolution, is last year’s war. “It’s time for us to move on to the trillions of dollars we’ve got to deal with.”

Dow Slips

Concern over a possible shutdown helped push down stocks yesterday. The Dow Jones Industrial Average slipped 17.26 points, or 0.1 percent, to 12,409.49 at 4 p.m. in New York and the Standard & Poor’s 500 Index dropped 0.2 percent. Futures on the S&P 500 index rose 0.4 percent at 10:30 a.m. in London, indicating the benchmark index will rebound today.

Bond yields in the U.S. are lower now than when the government was running a budget surplus a decade ago even though Treasury Department data show that the amount of marketable debt outstanding has risen to $9.13 trillion from $4.34 trillion in mid-2007.

Treasuries fell today, sending the yield on the 10-year note five basis points higher to 3.60 percent. That’s below the average of 7 percent since 1980 and compares with an average of 5.48 percent in the 1998 through 2001 period, according to Bloomberg Bond Trader prices.

‘Extremely Narrow’

Neither Obama nor Reid identified the outstanding issues. Reid said they were “extremely, extremely narrow,” yet “the sad part about it, we keep never quite getting to the finish line.” He said he is “not really confident” that a deal will be reached, though “I’m very, very hopeful.”

Boehner said in a statement with Reid that they had “narrowed the issues” and would “continue to work through the night to attempt to resolve our remaining differences.”

Senator Dick Durbin of Illinois, the chamber’s second- ranking Democrat, said yesterday that lawmakers are divided by provisions, known as policy riders, woven into a bill funding the government for the rest of this year. They would change administration policies on environmental regulations as well as funding for Planned Parenthood, which provides abortions among other health services.

“It appears that the debate is no longer over deficit reduction,” Durbin said. “It has really devolved into a debate over policy questions that have nothing to do directly, maybe even indirectly, with the budget deficit that we face or the money we’re going to spend.”

Lawmakers had also been debating about $40 billion in cuts from the government’s $3.7 trillion annual budget.

Veto Threat

Yesterday, the administration threatened to veto a House- approved measure that would keep the government open for business until April 15, cut $12 billion in spending and fund the Pentagon through Sept. 30, the end of the 2011 fiscal year. The administration called the measure a “distraction from the real work” of forging a compromise.

“Non-essential” federal workers face the prospect of going without pay during the impasse. Representative Jim Moran, a Virginia Democrat, is advising federal workers living in his district just outside Washington to conserve cash, warning a shutdown could stretch into next week. With so much concern over the budget deficit, he said, lawmakers may not agree to provide federal workers with back pay as they have in the past.

‘Conserve Their Money’

“They’re going to have to conserve their money to make their mortgage and car payments -- they’re going to have to determine what are the essentials,” Moran said. He estimated that 100,000 workers in the Washington area may be furloughed.

Many government programs would continue during a shutdown, said Jeff Zients, deputy director of the White House budget office.

Social Security checks will continue to flow, the postal service will deliver the mail, military operations in Afghanistan, Iraq and Libya will go on and the air traffic control system will operate, Zients said.

“Generally speaking, services that are critical to safety of life and protection of property are excepted from a shutdown,” he told reporters. So too, he said, are programs that don’t rely on the budget bill being debated for their funding.

Elected officials, including Obama, Boehner and Reid, would be paid as usual during a shutdown unless Congress changes the law. Democratic Senators Ben Nelson of Nebraska, Sherrod Brown of Ohio and Joe Manchin of West Virginia all announced they would forgo their paychecks during a shutdown.

Soldiers, law enforcement officials and others whose jobs are deemed essential would continue to work, yet wouldn’t get paychecks until the budget impasse is resolved.

Obama said the dispute “could severely hamper the recovery and job growth.”

“We’ve been working very hard over the last two years to get this economy back on its feet,” he said. “For us to go backwards because Washington couldn’t get its act together is unacceptable.”

--With assistance from Nicholas Johnston in Washington. Editors: Leslie Hoffecker, Laurie Asseo.

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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