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Prosecutors' Letter About Lloyd Blankfein

Prosecutors' Letter About Lloyd Blankfein

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Published by: DealBook on Mar 23, 2011
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11/27/2011

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UnitedStatesAttorneySouthernDistricta/NewYork
V.S.
DepartmentofJustice
TheSilvio
J.
MolloBuildtngOneSaintAndrew'sPlaza
Nell'York,NewYork10007
March21,2011ByHandDelivelYTheHonorableRichardJ.HolwellUnitedStatesDistrictJudgeSouthernDistrictofNewYork500PearlStreetNewYork,NY10007Re:UnitedStatesv.RajRajaratnam,S209Cr.1184(RJH)DearJudgeHolwell:TheGovernmentrespectfullysubmitsthisletterinordertomovetoprecludethedefendantfromcross-examiningaGovernmentwitness,LloydBlankfein,on(i)whetherGoldmanSachsbearsresponsibilityforthe2008financialcrisis,and(ii)whetherGoldmanSachsispresentlythesubjectofanypendinginvestigationsbyeithertheDepartmentofJustice("DOJ")ortheU.S.SecuritiesandExchangeCommission(the"SEC").TheGovernmentmakesthisapplicationpursuanttoFederalRulesofEvidence402and/or403.TheGovernmentintendstocallLloydBlankfein,theCEOofGoldmanSachs,totestifyonthesubjectsofRajatGupta'sserviceontheGoldmanSachsBoardofDirectors,thedutiesofconfidentialitythatGuptaowedtoGoldmanSachs,andcertainconfidentialinformationthatGuptaobtainedthroughhisserviceonGoldman'sBoardin2008.OnMarch7,2010,RajRajaratnamservedatrialsubpoenaonGoldmanSachsrequesting,amongotherthings,"documentssufficienttoshowcurrentlyactiveinvestigationsbeingconductedby"theDOJ,SECandtheU.S.Attorney'sOfficefortheSouthemDistrictofNewYorkthatconcernGoldmanSachs.AcopyofthissubpoenaisattachedheretoasExhibitA.TheGovernment'sunderstandingisthatGoldmanSachsconferredwithRajaratnamregardingthesubpoenaandrespondedbyreferringRajaratnamtoitsAnnualReportonForm10-KforFiscalYearEndedDecember31,2010,whichwasfiledon
February
28,2011.TherelevantportionsofthisFOlID10-K(pages191-201)areattachedheretoasExhibitB.TheForm10-Kcontainsreferencestoapproximately20different"legalproceedings,"amongthem"FinancialCrisis-RelatedMatters,""Mortgage-RelatedMatters,"and"FannieMae
 
HonorableRichardJ.HolwellMarch21,2011Page2Litigation."Importantly,notoneofthe20differentlegalproceedingsconcernsRajRajaratnam,theGalleonGroup,orRajatGupta.NordoestheForm10-Kindicatethatanyofthevarious"legalproceedings"bearsuponthecredibilityofMr.Blankfein.OnMarch20,2011,RajaratnamsentalettertotheGovernment(attachedasExhibitC)requestingtheproductionofdocumentssufficienttoidentifyall"openinvestigations"ofGoldmanSachsbytheDOJorSEC.
In
furtheranceofthisrequest,Rajaratnamcites
UnitedStatesv.Chitty,
760F.2d425,428(2dCir,1985),acaseinwhichprosecutorsfailedtonotifythedefensethatoneoftheGovernment'switnesseshadbeennotifiedthathewasthetargetofaninvestigationbytheUnitedStatesAttorney'soffice.Thiscaseiswhollyinappositeforthefollowingreason:ThisOfficehasnotnotifiedMr.BlankfeinorGoldmanSachsthateitherisatarget(or,forthatmatter,asubject)ofanypendingcriminalinvestigation.ThereissimplynoriskthatMr.BlankfeinmightalterhistestimonytoaffecttheoutcomeofaninvestigationsinceGoldmanSachshasreceivednosuchnotificationfromthisOffice.
PendingLegalProceedings.
Second,thisCOUltshouldprecludecross-examinationof
Mr,
BlankfeinonthevariouslegalproceedingsdescribedintheForm1O-K.Thoseproceedingsareofnorelevancetothismatter,sincethoseproceedingsdonotrelatetoRajaratnam,Galleon,Gupta,orMr.Blankfein'scredibility.TheonlyconceivablerelevancewouldbegeneralimpeachmentofMr.Blankfein.Rajaratnammightsuggest,forexample,thatbecauseGoldmanSachsistiedupinmanydifferentlegalproceedings,thefilm-andbyextensionitsCEO,Mr.Blankfein-isnottobebusted.Butthisclaimistotallyunfoundedandwouldthreatenconfusionoftheissues,sincethelegalproceedingsdescribedintheForm10-KrelatetotheconductofGoldmanSachs,andnotMr.Blankfeinpersonally.Moreover,theForm10-Kstates(atpg.191)that"[m]anyoftheseproceedingsareatpreliminarystages."TheveryfactthattheproceedingsareongoingmeansthatGoldmanSachs'sconduct(orpotentialmisconduct)isasyetundetermined,Alternatively,RajaratnammightattempttoimplythatMr.Blankfeinistestifyinginthismatterinhopesofobtainingabetterresolutionofsomeseparate,ongoinglegalproceedinginvolvingGoldmanSachs.Thereisabsolutelynosupportforsuchaclaim,itisentirelyfalse,andthelimitedprobativevalueofanycross-examinationalongtheselineswouldbesubstantiallyoutweighedbyitsprejudice.TheGovernmenthasmadenopromise,explicitorimplicit,directorindirect,expressorimplied,thatMr.BlankfeinorGoldmanSachswillreceiveanythingatallinexchangeforhistestimony.Indeed,Mr.Blankfeinhasbeensubpoenaedtotestifyandisthereforelegallyrequiredtoappear.Mr.Blankfein'stestimonyislimitedinscope.WereMr.Blankfein'stestimonyregardingtheactionsofoneBoardmember,RajatGupta,tobecomethevehiclethroughwhichheiscalledupontoanswerquestionsregardinganynumberofunrelatedpendingproceedings,therewouldbeaseriousdangerofprejudiceandconfusion.
 
HonorableRichard
1.
HolwellMarch21,2011Page
3
GoldmanSachs'Roleinthe2008FinancialCrisis.Second,thisCourtshouldprecludethedefendantfromsuggestingtothejurythroughquestionsorotherwisethatGoldmanSachsorMr.Blankfeinwasresponsibleforthe2008financialcrisis.AnysuchattempttoimpeachMr.BlankfeininthismannershouldbeprecludedpursuanttoFederalRulesofEvidence402and403.WhetherGoldmanSachsplayedanyroleinthatcrisisiswhollyirrelevanttoMr.Blankfein'stestimonyaboutMr.Gupta.Moreover,evenifsuchissuesweresomehowrelevant,theprobativevalueofsuchevidenceissubstantiallyoutweighedbythedangerofunfairprejudice.Manyindividuals,including,potentially,thejurors,havestrongfeelingsaboutthatcrisis.
It
wasforthisveryreasonthatdefensecounselrequestedthattheGovernmentnotputonevidencethatRajaratnamwasinanywayresponsibleforthecrisis(andtheGovernmentagreedthatitwouldnotdoso).Weredefensecounseltosuggestthroughcross-examinationorotherwisethatMr.Blankfeinorhisfirmwasresponsibleforthefiscalcrisis,therewouldbeariskofundue,unwarrantedjurorprejudiceagainstMr.Blankfein'stestimony.GoldmanSachsisnotontrialinthismatter,Thecross-examinationofMr.Blankfeinissimplynottheappropriateforumtodelveintothehighlycomplexcausesofthe2008financialcrisisortheensuingeconomicrecession.Respectfullysubmitted,PREETBHARARAUnitedStatesAttorneyfortheSouthernDistrictofNewYorkby:
---",,--,{)(...___::_._iL_
JONATHANSTREETERREEDBRODSKYAssistantUnitedStatesAttorneysANDREWMICHAELSONSpecialAssistantUnitedStatesAttorneycc(byemail):JohnM.Dowd,Esq.Terence1.Lynam,Esq.

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