In what may be a setback for Rajat Gupta, federal prosecutors brought fresh charges on Tuesday against the former Goldman Sachs director, alleging that he provided illegal tips to his friend Raj Rajaratnam, founder of Galleon Group Hedge Fund, now in prison, for a longer period than originally alleged.
The prosecutors alleged that it began in March 2007 and not in 2008 as was alleged previously and that Gupta tipped Rajaratnam about Goldman Sachs's first quarter 2007 earnings.
Gupta's attorney Gary P Naftalis dismissed the charges brought against Gupta in a superseding indictment as 'totally baseless.'
'The newly added charges - like the ones brought last year - are not based on any direct evidence, but rely on supposed circumstantial evidence.
'The facts in this case demonstrate that Mr Gupta is innocent of all of these charges, and that he has always acted with honesty and integrity,' he said in a statement.
'He did not trade in any securities, did not tip Mr Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo.'
The new indictment does not, however, charge Gupta with profiting directly from trades, but it seeks to prove that Gupta allegedly had a financial relationship with Rajaratnam who is now serving a year-year prison sentence.
It alleged that Gupta provided inside information to Rajaratnam because of Gupta's friendship and business relationships with Rajaratnam.
'Gupta benefited from Rajaratnam's capital commitment to, and position as a limited partner of, the private equity fund, according to the prosecutors.
The prosecutors' said that the 'conspiracy' continued until January 2009, although Natfalis, Gutpa's lawyer, had said that Gupta's friendship with Rajaratnam had deteriorated before that.
He said that there were a host of legitimate reasons for any communications between Gupta and Rajaratnam - not the least of which was Gupta's attempt to obtain information regarding his $10 million investment in the GB Voyager fund managed by Rajaratnam.
'In fact, Mr Gupta lost his entire investment in the fund, negating any motive to deviate from a lifetime of probity, integrity and distinguished service. We are confident that the government's allegations cannot withstand scrutiny, and that Mr. Gupta will be completely exonerated,' Natfalis said in the statement.
Gupta was previously the worldwide director of McKinsey and Company until 2007 and has been considered a management guru and has been praised for his work by former US president George W Bush.
Gupta was released last year on a $10 million bail following his arrest on insider trading charges.
