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  • Michael Kimelman’s Attorney Outlines His Client’s Defense In Goffer/Kimelman Trial: “I Have A Man’s Life In My Hands”.  0 comments
    May 20, 2011 9:37 AM
     
    15ILGOF1 Trial
    1 UNITED STATES DISTRICT COURT
    1 SOUTHERN DISTRICT OF NEW YORK
    2 ——————————x
    2 UNITED STATES OF AMERICA,
    3
    3 v. 10 CR 56 (RJS)
    4
    4 ZVI GOFFER, EMANUEL GOFFER,
    5 MICHAEL KIMELMAN,
    5
    6 Defendants.
    6 ——————————x
    7
    7 New York, N.Y.
    8 May 18, 2011
    8 9:39 a.m.
    9
    9 Before:
    10
    10 HON. RICHARD J. SULLIVAN,
    11
    11 District Judge
    12
    12 APPEARANCES
    13
    13 PREET BHARARA
    14 United States Attorney for the
    14 Southern District of New York
    15 ANDREW L. FISH
    15 RICHARD TARLOWE
    16 Assistant United States Attorneys
    16
    17 WILLIAM R. BARZEE
    17 DAVID PETTUS
    18 Attorneys for Defendant Zvi Goffer
    18
    19 MICHAEL S. ROSS
    19 Attorney for Defendant Emanuel Goffer
    20 Josephine Paz, Paralegal
    20
    21 WILSON, SONSINI, GOODRICH & ROSATI
    21 Attorneys for Defendant Michael Kimelman
    22 BY: MICHAEL S. SOMMER
    22 MORRIS J. FODEMAN
    23 SCOTT TENLEY
    23
    24 ALSO PRESENT: Special Agent Matthew Thoresen, FBI
    24 Gary Smith, Paralegal, U.S. Attorney’s Office
    25
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 (In open court; jury not present)
    2 THE COURT: Let’s see if the jury is ready.
    3 (Jury present)
    4 THE COURT: We will now hear from Mr. Sommer on behalf
    5 of Mr. Kimelman.
    6 MR. SOMMER: Good afternoon. One more lawyer.
    7 Michael Kimelman has pleaded not guilty to the charges against
    8 him for one simple reason: He is not guilty. And we can stay
    9 here for five weeks, or five months, and the government will
    10 never be able to prove to you beyond a reasonable doubt that
    11 Michael is guilty of either securities fraud or conspiracy to
    12 commit securities fraud, because of the simple truth that
    13 Michael Kimelman never knew about any insider. He never traded
    14 stocks on the basis of inside information, and never agreed to
    15 be part of any criminal conspiracy. He never bribed anyone, he
    16 never made millions of dollars, he never paid for tips, he
    17 never pretended about anything, he never lied about anything.
    18 That is what the evidence in this courtroom will show
    19 with respect to Michael Kimelman.
    20 The presumption of innocence which Judge Sullivan has
    21 already described to you is more than a phrase that we’ve all
    22 heard in a movie or read in a book. It is the bedrock of our
    23 justice system. It is the bedrock principle that protects all
    24 of the citizens of this country — you and me — from unjust
    25 government prosecutions. It is the principle that will
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 determine the future of Michael’s life. Whether this nightmare
    2 ends for him with your verdict of not guilty, or, on the other
    3 hand, whether his future is gravely in doubt.
    4 Not guilty, ladies and gentlemen. I stand before you
    5 to tell you that Michael is not guilty. Those two incredibly
    6 important words, which, by the end of this trial, I hope and
    7 pray you will embrace when it comes to Michael. Not guilty.
    8 Good afternoon. As Judge Sullivan has told you, my
    9 name is Michael Sommer, I represent Michael Kimelman, and I’m
    10 going to be assisted at this trial by my colleagues Mo Fodeman
    11 and Scott Tenley. Mr. Barzee has already thanked you for your
    12 service. I obviously share in those sentiments. I know it is
    13 a burden on all of you, but our system could not work without
    14 you. You are the people that hold the government to its burden
    15 of proof. Our system allows nothing less.
    16 Now, I’ve referred already to the three principle
    17 tenets of the justice system: The presumption of innocence,
    18 proof beyond a reasonable doubt, and a plea of not guilty.
    19 Because Michael has pleaded not guilty, he is presumed not
    20 guilty — he is presumed innocent, and the law says that he is
    21 not guilty unless and until the prosecutors behind me prove to
    22 each of you beyond a reasonable doubt that he is guilty of a
    23 crime.
    24 But that’s not going to happen in this courtroom. The
    25 prosecution will not be able to satisfy that high burden of
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 proof for a very simple reason. That’s going to be my theme to
    2 you folks, simplicity. The simple reason is Mike is not guilty
    3 of a crime.
    4 At this trial you’re going to learn a little bit about
    5 Michael. He’s 40 years old. His wife Lisa is a cook. They
    6 both work hard in their respective careers raising their three
    7 young children. He is a graduate of Lafayette College, and
    8 after college, he attended U.S.C. Law School. He worked as a
    9 securities lawyer for a couple of years, and then became a
    10 trader. Worked at a few firms. He never worked at Galleon,
    11 which I know you heard something about. Mike never worked
    12 there.
    13 He did work at a company called Quad Capital, a new
    14 one you haven’t heard of yet. He worked there until late 2007
    15 when, as you heard, he and others decided to form this company
    16 Incremental. You are going to learn that throughout late 2007
    17 and through the first half of 2008, Mike devoted substantial
    18 time to putting the many pieces together to leave his
    19 employment at Quad and open the doors of Incremental. It
    20 required meetings at night, meetings on weekends, meetings
    21 during the day, which obviously could not be conducted at the
    22 offices of his current employer or in front of his current
    23 colleagues.
    24 But Mike devoted the time and succeeded in putting
    25 those many pieces together. A rather remarkable
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 accomplishment, considering he continued to work full-time to
    2 support his family.
    3 After months of hard work, Mike left Quad, and along
    4 with Zvi Goffer and Emanuel Goffer, opened the doors of
    5 Incremental in August 2008. As you heard, the number of people
    6 that were hired grew and grew and grew. This is a successful
    7 company.
    8 But let me be clear about something that you don’t
    9 know and you haven’t heard. There is no allegation in this
    10 case that any improper trading was done at Incremental. That
    11 company operated from August 2008 without any allegation of
    12 insider trading ever being made.
    13 The conduct at issue in this case, it is important you
    14 know this, relates to the period of time before Incremental was
    15 ever started. When Michael was at a separate company from Zvi
    16 Goffer and Emanuel Goffer. That’s the timeframe. You are
    17 going to hear all that. You’ll learn that.
    18 Today, of course, Mike’s future is an enormous
    19 question mark. The stakes cannot be higher for him. For his
    20 future either as a lawyer or a trader may very well hang in the
    21 balance of your verdict in this case. The stakes cannot be
    22 higher. I think you all know that.
    23 As Judge Sullivan explained to you, a defendant in a
    24 criminal case does not have to prove anything. We can sit
    25 here, and never say a word, never ask a question, never make an
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 objection, never speak to you, never give an opening. The fact
    2 that I’m standing here talking to you may suggest that we are
    3 going to play a slightly more active role in this case. But it
    4 is an important point nevertheless. As we have no burden of
    5 proof, it is not our job to disprove the charges.
    6 You know, one of the scariest parts of this case for
    7 me is that the prosecution’s accusations when it comes to Mike
    8 are so unfounded and so incorrect that you might just assume
    9 some of it must be right. You cannot do that. To do so would
    10 be a violation of your oath as jurors, to do so would be
    11 turning your back on the principle that a person is presumed
    12 innocent.
    13 As to each and every allegation that these folks over
    14 here have made, you must hold them to their burden of proof
    15 beyond a reasonable doubt.
    16 I tell you right now they will fail to prove their
    17 allegations with respect to Mike. And we will play our role in
    18 that endeavor. We will present evidence to you that the
    19 prosecutors’ allegations are false. We have no burden to do
    20 so. But I’m telling you right now we will. I will do so by
    21 questioning the witnesses who sit in that chair, and I’m going
    22 to play the prosecutors’ tapes to you.
    23 Let me make it simple. That’s what I’m promising to
    24 do for you folks. What you will learn at this trial is that
    25 the prosecutors conducted wiretaps, secretly listening in on
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 people’s phone calls between business associates, family
    2 members, for nearly a year. These secret recordings were made
    3 in connection with this case. Over that one-year period, the
    4 prosecutors and their FBI agents recorded thousands and
    5 thousands of calls from various folks, all secretly, without
    6 the people on the calls themselves knowing they were being
    7 recorded. Thousands of calls spanning nearly a year.
    8 Mr. Barzee — I usually don’t disagree with my co-counsel –
    9 Mr. Barzee said it was a couple thousand. You are going to
    10 hear that’s wrong. It was almost 30,000 calls recorded in the
    11 course of that nearly a year. 30,000.
    12 And in addition to the secret recordings, the
    13 prosecutors used informants. You heard them mention it
    14 briefly. These are people who have gotten into trouble on
    15 their own that are looking to avoid prison, by going out to try
    16 to get dirt on others. The prosecutors call these people
    17 “cooperators.” That’s their word for them. “Cooperators.”
    18 And what a cooperator does, is, as you will learn, is they sign
    19 a contract with the prosecutors. And the contract motives them
    20 to go out and bring back scouts. If the prosecutors are
    21 pleased with what the informants bring back, then the
    22 prosecutors take steps to have the Court reduce the prison
    23 sentence the informants would otherwise face.
    24 So at this trial, in addition to these thousands of
    25 secretly recorded wiretaps, you are going to hear about these
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 informants. I’m going to say to you right now, these
    2 informants, they wore secret recording devices. They have
    3 recordings from them too, more recordings. I’ll say to you
    4 right now, thank goodness all these recordings were made. That
    5 might strike you as a little odd to hear from a defense lawyer.
    6 I’ll say it again. Thank God they made all these recordings.
    7 For in the course of more than a year of such recordings, there
    8 is not a single recording, not one, not one, in which you will
    9 hear Michael Kimelman buying a stock based on an insider’s tip
    10 which came to him. Not one. And we can stay here and listen
    11 to 30,000 calls — and you won’t have to hear them, I
    12 promise — but you’re not going to hear one.
    13 You’re also going to learn that the prosecutors had
    14 one of their informants right in Mike’s company, Quad, sitting
    15 3 feet away from Mike for a year, a year, 3 feet away from him,
    16 and that informant was unable to bring back to the prosecutors
    17 evidence of a single instance of Mike Kimelman having traded on
    18 the basis of insider information. Not one. After a full year.
    19 So why is Michael Kimelman here? You may be thinking
    20 that to yourselves and that’s a good question. It is an
    21 excellent question. And I ask you to keep that question in
    22 mind as the evidence or rather the lack of evidence comes to
    23 you at this trial.
    24 Let me give you a preview. You are going to learn,
    25 and you’ve heard from the prosecutors already, that they
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 believe Zvi Goffer sometimes trades on inside information. And
    2 at this trial, I guess they’ll try to prove that to you with
    3 their wiretaps and informants. As you will learn, well over a
    4 year into its investigation of Zvi Goffer, the prosecution
    5 learned that Mike Kimelman was discussing opening this
    6 business, a new business with Zvi. From that moment, from that
    7 moment, Michael Kimelman had a bullseye on his back. For the
    8 thinking must go if Zvi Goffer is involved in insider trading,
    9 as the prosecution has charged, then their theory, their
    10 mindset, is that if Mike’s going to go into business with him,
    11 he must be guilty too. Guilt by association.
    12 But as you will hear Judge Sullivan explain to you,
    13 and instruct you at the end of the trial, when he tells you the
    14 law, the law in this country does not recognize guilt by
    15 association. In a criminal case, such as this, where there are
    16 three defendants, there are actually three trials going on.
    17 You are sitting at three trials that are going on in this
    18 courtroom. And you will be asked to deliver a separate verdict
    19 as to each defendant. Guilt by association will be a violation
    20 of your oath as jurors, since you must assess the evidence
    21 individually as to each defendant.
    22 So I stand before you in the case of United States v.
    23 Michael Kimelman. That’s the case I’m here for. You will have
    24 to judge Mike by the evidence or lack of evidence relating to
    25 him. Judge him by his own words. Judge him by his own
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 conduct. You will have to compare what the recordings show
    2 about him. Not what they may show about others. You will have
    3 to evaluate what, if any, credible evidence you hear from the
    4 informants about Mike as opposed to any credible evidence they
    5 may have about others.
    6 Do not allow yourselves to even entertain the notion
    7 of guilt by association. Do not allow your fellow jurors to
    8 entertain that notion.
    9 Let me then turn to the charges in the case. You’ve
    10 heard a little bit about them. I’m going to try not to cover
    11 the same ground. Now, the first count in this — this is
    12 what’s called an indictment. Judge Sullivan told you it simply
    13 tells what the charges are. There are actually two separate
    14 conspiracies charged here. You’ll hear a little bit about
    15 that. Mike is not charged in the first one. So count two is
    16 the first place we find Michael Kimelman. We created a chart.
    17 You heard a lot of names. This might actually facilitate
    18 putting these names in context. My promise to you, simple.
    19 Simple.
    20 Can everyone see that okay? Count two of the
    21 indictment, while you’re looking at that, charges that Michael
    22 Kimelman entered into a conspiracy — that’s a fancy legal term
    23 for an illegal agreement — to engage in insider trading.
    24 Now, here’s the government theory. This is what the
    25 government says. Okay. The lawyers at Ropes & Gray basically
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 took information from their law firm, which they shouldn’t have
    2 been doing, and they tell Jason Goldfarb. Bribes and all this
    3 stuff. You’ll never hear anything about that involving Michael
    4 Kimelman. Never happened. They tell Jason Goldfarb. This is
    5 the government theory. Jason Goldfarb tells Zvi. Zvi tells
    6 all these folks down at the bottom, including Michael. Okay.
    7 That’s your conspiracy.
    8 The only other charges against Mike in the case relate
    9 to two purchases of stock he made in 3Com. You heard about
    10 Axcan. Mike’s not charged in a substantive count involving
    11 Axcan. The only two charges against Mike beyond the conspiracy
    12 count is when he bought 3Com stock on August 8 and again on
    13 September 25, Mike had been told by Zvi about 3Com secret
    14 inside information that came down along this tipping chain.
    15 Those are the charges against Mike.
    16 Now, let me tell you right now, as I already have, you
    17 will not hear a single call which proves any of these charges.
    18 There is not a single recording in which you’ll hear Mike being
    19 told by Zvi that Zvi has inside information. Not one.
    20 Make no mistake about it, you will hear calls between
    21 other people which might strike you as sounding like instances
    22 where people are talking about inside information. You may
    23 hear that. You are going to hear about lawyers from Ropes &
    24 Gray passing on information. You’re going to hear about people
    25 using code words. You’re going to hear people being described
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 as golden gooses, even silver gooses. But Michael Kimelman
    2 will not be on any of those calls. Not one.
    3 You’ll hear from the prosecution’s informants. And
    4 actually you’re going to hear from Judge Sullivan that you need
    5 to be very careful in evaluating what these people say. Again,
    6 you are not going to hear a single informant tell you that he
    7 knows of a single instance when Michael Kimelman traded stock
    8 while in possession of inside information.
    9 So, against this complete absence of evidence, how
    10 will the prosecutors over here try to persuade you that they
    11 even have a case against Mike? I’m going to tell you. They’re
    12 going to ask you to guess. Since they have no recordings to
    13 prove that Zvi told Mike about any insider, they will point to
    14 something, and you heard it already, they’ll point to something
    15 like Zvi and Mike agreeing to meet outside the office or going
    16 to the gym together. And they’ll ask you to guess what was
    17 said at such an event. To speculate about conversations you
    18 will never hear. They will urge you to assume that it was at
    19 such face-to-face meetings when Zvi told Mike about the
    20 insiders.
    21 You already heard their opening effort to ask you to
    22 guess in their opening statement. They mention, oh, they would
    23 sometimes meet. And then they said to you, use your common
    24 sense. Since they brought that term up, let me address it
    25 right now. Using your common sense is perfectly appropriate.
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 Indeed, Judge Sullivan will tell you just that when he gives
    2 you your final instructions on the law.
    3 But, what the prosecution means by “use your common
    4 sense” is something different entirely. The prosecution points
    5 to two people having a conversation and says “use your common
    6 sense” as some kind of code for guess, or speculate, or assume
    7 what happened during a conversation that you will never hear.
    8 Be very careful of the prosecution’s urging you to use your
    9 common sense to fill in the blanks to cover for the fact that
    10 actual evidence does not exist.
    11 Please, remember, this is a criminal trial where the
    12 future of Michael Kimelman hangs in the balance, and that’s why
    13 the law imposes such a high burden of proof beyond a reasonable
    14 doubt. The law requires that they come forward with actual
    15 evidence. Not guesses. Not speculation. That incredibly high
    16 burden of proof exists to protect all of us, to make sure that
    17 a criminal charge is supported by actual proof. So please be
    18 vigilant, don’t let yourself guess. Don’t let your fellow
    19 jurors guess. Please. Hold the prosecution to the standard
    20 they must meet to prove what actually happened.
    21 Let me add this, in the theme of my trying to keep it
    22 simple. You’re really not going to have to engage in much
    23 guesswork at all. For you will learn that the prosecution’s
    24 invitation to you to guess at what may have happened at the gym
    25 or in a conversation on the street, is completely unsupported.
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 First, you are going to learn that there is a perfectly
    2 legitimate reason why Mike and Zvi would need to meet away from
    3 their respective offices, from the traders who surrounded them
    4 on their respective trading floors, because they all worked in
    5 very close quarters. Remember, they are in the process of
    6 trying to set up a new trading firm. As you can imagine, it is
    7 not the kind of thing you are going to talk about in front of
    8 your current employer. Not the best exit strategy from your
    9 job.
    10 Second, the prosecution’s guessing game about what may
    11 or may not have been said is a big red herring. You are going
    12 to learn from the prosecution’s own witnesses about how people
    13 who wanted their conversations to be shrouded in secrecy
    14 accomplished that objective. Not by meeting for a cup of
    15 coffee or a workout. But rather through these prepaid phones,
    16 bat phones, you’ll hear them talk about, bubble phones, secret
    17 phones. These were secret phones.
    18 This is the indictment in this case, ladies and
    19 gentlemen. It names nine people. Nine people are named to
    20 have allegedly engaged in insider trading. As you will hear at
    21 this trial, when these folks wanted to have secret
    22 conversations, they used the secret phones. The evidence you
    23 will hear at the trial is that Arthur Cutillo had a secret
    24 phone, you’re going to hear that. Brien Santarlas, the other
    25 Ropes & Gray lawyer, secret phone. Let’s move down. Jason
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 Goldfarb, you’ll hear evidence about his secret phone. Craig
    2 Drimal, secret phone. Let me put it down here, it might fit
    3 better. David Plate, he had his secret phone. Some of these
    4 people had more than one you’re going to hear. Government says
    5 Emanuel Goffer and Zvi Goffer both had secret phones. You’ll
    6 hear tapes, Gautham Shankar had a secret phone.
    7 Oh, I’m left with one. Hmm, who is the one and only
    8 person out of the nine people named in the indictment, who is
    9 the one and only person to never have the secret phone?
    10 Michael Kimelman. He never had one. There will be no dispute
    11 about it. He had no reason to. He was not involved in any
    12 wrongdoing. There will be no dispute.
    13 When you hear that evidence, folks, you will
    14 understand why the prosecutors so desperately want you to
    15 engage in guessing about what happened over a cup of coffee.
    16 And make no mistake about it, the evidence the
    17 prosecution does have proves just the opposite of what they’re
    18 asking you to guess about. The evidence is going to show you
    19 that Mike was not being told about any Ropes & Gray lawyers on
    20 any call. The genuine evidence will show that there is no
    21 informant with evidence that Mike traded on inside information.
    22 And while this could have easily been called the secret phone
    23 gang, the prosecutors know perfectly well, as you will, that
    24 Mike Kimelman was never a part of that gang. That’s why they
    25 want you to do so much guessing.
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 Third reason why their invitation to guess is
    2 disproved by the evidence you will hear. You’ve heard it a
    3 little bit. Bribery. Payments. As you will learn, being in
    4 the insider trading business can be a little dangerous. When
    5 insiders like the lawyers at Ropes & Gray decide to breach
    6 duties and tip others, as the prosecution says, the stakes can
    7 be very high. This trial should make that pretty clear to all
    8 of you. If you’re an insider and you get caught passing inside
    9 information, you might go to prison, as you’ll hear from some
    10 of the informants, maybe for a very, very long time. Because
    11 of that, as you will learn, the people disclosing tipping the
    12 information want to be paid by the people who are using the
    13 information. You’ll hear at this trial they were paid. They
    14 were paid by the people who received the information.
    15 Again, nine people. You are going to hear that Arthur
    16 Cutillo and Brien Santarlas were paid for the information they
    17 were given. Jason Goldfarb was paid. Craig Drimal as you will
    18 hear was paid. David Plate was paid. The government says Zvi
    19 Goffer and Manny Goffer were involved in paying. You’ll hear
    20 tapes that Gautham Shankar was paying. We still have one left.
    21 Why? You know. You already know. Who was the one and only
    22 person out of the nine people charged in the indictment, the
    23 one and only person who never paid or was paid, who never
    24 bribed anyone, who was the one person who had no reason to?
    25 Michael Kimelman. Never paid a penny, never received a penny,
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 he had no reason to. He was not involved in any wrongdoing.
    2 Michael stands in a unique position at this trial,
    3 folks. No recordings that he was ever told anything. No
    4 informant who will say Mike traded any stock while knowingly in
    5 possession of inside information. Mike’s the only guy who
    6 never had a throwaway phone or secret phone. Mike is the only
    7 guy who never was involved in the money. Is a theme starting
    8 to emerge here? Each one of these facts standing alone by
    9 itself creates a reasonable doubt as to Michael Kimelman.
    10 Together, it is not even a close call.
    11 So, what will the prosecutors do? Because I told you
    12 this is undisputed. What will they do? How will they try to
    13 distract you from these facts other than ask you to do a lot of
    14 guessing? Well, let me tell you a couple of things they’re
    15 going to do. They will come forward with recordings that they
    16 say sound suspicious. Ah-ha, ah-ha, they will say, they found
    17 one where a lawyer is mentioned. Be very careful, folks. Be
    18 very, very careful. Watch out for the curve ball. When you
    19 listen carefully to that call, there will be no evidence at all
    20 that the lawyer being discussed was a Ropes & Gray lawyer.
    21 There will be no evidence at all that the company being
    22 discussed was a public company. Because if it is not public,
    23 you can’t go out and buy shares and make money. The
    24 prosecution will come forward with no evidence that Mike bought
    25 any stock about this mystery company or even tried to find out
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 the name of the company so he could go buy stock.
    2 Since a lawyer is mentioned in the call, and that sort
    3 of fits their theory, they’ll put a government exhibit sticker
    4 on it and they’ll play that tape. And they’ll hope, they’ll
    5 hope that you won’t realize that it fails to demonstrate any
    6 trading at all, much less insider trading. I have a lot more
    7 confidence in you folks. I think you will all be able to tell
    8 the difference between a call that’s connected to Ropes & Gray
    9 lawyers on the one hand, and a call that’s completely unrelated
    10 to trading on the other.
    11 While we are on the subject of lawyers, you’ve heard a
    12 lot about lawyers and you’ve heard a lot from lawyers, I should
    13 remind you that Mike Kimelman was trained and actually worked
    14 as a lawyer. You are going to hear many calls recorded from
    15 Zvi Goffer’s non-secret phone, that’s the one that was actually
    16 in his name or, you know, they recorded. You’ll hear calls
    17 where he called Mike and asked legal questions.
    18 Now, you are not going to hear anything about insiders
    19 on any of these calls. As you listen, you’ll hear Mike answer
    20 the questions candidly, honestly, no code words, no mystery,
    21 just honest responses. Zvi had questions about legal
    22 proceedings and legal terms, and Mike candidly and honestly
    23 answered those.
    24 But the prosecution again will point to those and say,
    25 ah-ha, Mike Kimelman must have known that Zvi Goffer was
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 getting information from lawyers since he’s asking about legal
    2 terms. I’m not sure I even follow that, but that’s their
    3 theory.
    4 It is utter nonsense, ladies and gentlemen, since, as
    5 you will learn, legal terms are mentioned in public articles
    6 and publications about these mergers and acquisitions all the
    7 time. All the time. If you’re not a lawyer, if you’re a
    8 trader, you don’t know what some of those terms mean, what
    9 would you do? Who would you ask? You call your buddy who is a
    10 lawyer. That’s all that’s going on in these calls.
    11 You’ve got to be careful. You’ve got to be careful.
    12 You look at the call, listen to the call, and distinguish
    13 between a perfectly legitimate call, and what the government
    14 wants to create, this aura of suspicion. Again, suspicion, as
    15 you know, is not enough in a criminal case. That’s all they
    16 are ever going to have. Hold the prosecution to its burden of
    17 proof. No guessing.
    18 Listen to Mike’s voice. One of the unique things
    19 about a wiretap is you can hear someone’s voice. Were they
    20 whispering, “Hey, don’t tell anyone, but,” or is it candid,
    21 forthright. That will be for you to evaluate. I suspect when
    22 you hear no code words, no whispering, it will be the very
    23 opposite of what the prosecutors are asking for you to assume.
    24 Finally, I think the prosecution will ask you to
    25 convict Michael Kimelman because he told a joke. I kid you
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 not. They will play for you a recording made by one of their
    2 informants who was secretly wearing a recording device. You
    3 will hear the informant pushing Zvi to tell them who his
    4 contacts are, who his sources are, what guides his trading. As
    5 you heard already, this informant, Mr. Slaine, is posing as a
    6 possible investor. He’s dangling a lot of money out there.
    7 You are going to hear at this trial, folks, that in
    8 this industry it is all about contacts and sources. I am not
    9 talking about insider contacts or sources. I’m talking about
    10 legitimate contacts and sources. The people who alert you to
    11 companies which are in the news. You’ve heard a lot about it.
    12 I liked the analogy about the gold and the stream. I thought
    13 that was clever. But that’s what it’s like. A constant flow
    14 of information. Traders are being barraged by rumors, tips,
    15 ideas. I talked to this guy, I talked to that guy. That’s how
    16 this industry works. None of that is illegal. You are going
    17 to hear it on these tapes. My guy heard this about company X.
    18 My guy heard that about company Y. My source says a hedge fund
    19 is trading company Z. My guy says we should definitely be
    20 playing company A. On and on and on. None of it is illegal.
    21 Getting back to this tape, this joke, I sort of went
    22 off on a tangent. The informant is pushing Zvi for his sources
    23 and contacts, and Zvi does not want to reveal them. No one in
    24 this industry would, regardless of whether they’re involved in
    25 insider trading or not, as you will learn. So instead of
    SOUTHERN DISTRICT REPORTERS, P.C.
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    116
    15I3GOF4 Opening – Mr. Sommer
    1 revealing sources and contacts, Zvi says he gets his
    2 information from a construction worker. Mike laughs. And
    3 poking fun at Zvi, Mike points to a guy out the window who is
    4 repairing the street, a pothole, and says that Zvi’s source is
    5 the guy fixing the pothole. Ha ha.
    6 The prosecution will play that tape for you. They
    7 will point to Mike poking fun at Zvi’s ridiculous statement
    8 about his source being the guy who repairs the street, and they
    9 will try to suggest to you that this is somehow evidence that
    10 Mike was part of a criminal conspiracy. I kid you not.
    11 What you’ll see time and time again throughout this
    12 trial will be the prosecution trying to come up with excuses
    13 for inconvenient facts when it comes to Michael Kimelman. When
    14 there is evidence that is completely inconsistent with him
    15 knowing anything about Ropes & Gray or inside information, the
    16 government will say, oh, that’s just some kind of creative
    17 cover. Just trying to cover for himself. They want it both
    18 ways. Heads they win, tails we lose. And that is, as you will
    19 learn, is not only unfair, it is not supported by the evidence.
    20 You see, when it comes to Mike, all the trading
    21 records, the instant messages, the e-mail, the thousands of
    22 recordings, the lack of a throwaway phone, the lack of any
    23 payments, they are all inconsistent with insider trading for
    24 one reason, and one reason alone. The most obvious reason.
    25 Michael Kimelman is not guilty of insider trading or conspiracy
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 to do so.
    2 But even beyond the absurdity of trying to find
    3 someone guilty with something like a joke, we’re going to show
    4 you more. Before this trial is over, we’ll present you with
    5 evidence which proves to you that when it comes to the question
    6 of was Zvi ever telling Mike about insiders, the answer will be
    7 a resounding no.
    8 Let me be clear about this. You’re going to hear that
    9 Mike and Zvi traded with a lot of the same stocks, a lot.
    10 There is going to be no dispute about that. They talked about
    11 various stocks and ideas and contacts and sources on a daily
    12 basis. Sometimes many times a day. There is going to be no
    13 dispute that they recommended stocks back and forth to each
    14 other, and they would often buy those same stocks. You’ll hear
    15 Zvi and others frequently saying “You got to own this, you got
    16 to own that, I love this stock, I love that company.” You are
    17 going to hear that kind of stuff, and Michael Kimelman and
    18 others to whom Zvi Goffer said those things would go ahead and
    19 buy that stock. For, at the end of the day, notwithstanding
    20 Zvi’s bluster and his bravado, notwithstanding some of the
    21 exaggerations Mr. Barzee referred to, and some of the wild
    22 stories he told, Zvi Goffer was regarded as being a pretty
    23 talented trader. And when he recommended a stock, people
    24 listened.
    25 But folks buying a stock on that kind of
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 recommendation, “I love this company, you got to own it, I love
    2 this,” that’s not illegal at all, as Judge Sullivan will
    3 explain to you.
    4 Even if you conclude, after hearing all the evidence
    5 in this case, that Zvi Goffer in fact had inside information
    6 from Ropes & Gray — and that’s for you to decide — but even
    7 if you conclude that that is so, if what he said to Mike
    8 Kimelman was “I love this company, I love that, you got to own
    9 it,” Michael Kimelman did nothing wrong by buying that stock.
    10 Let me repeat that. The prosecution must prove that Michael
    11 Kimelman knew that Zvi Goffer had inside information when he
    12 recommended that stock to Mike, and Mike then went ahead and
    13 bought it, and they’ll never be able to do it. That’s why your
    14 task will be so simple when it comes to Mike. There will be no
    15 evidence that he ever traded on the basis of having inside
    16 information from Zvi.
    17 I don’t want to be repetitive, but nothing on a tape,
    18 nothing from an informant, no throwaway phone, no payments.
    19 Simple.
    20 Let me just say a few words about 3Com, these two
    21 trades. Those are the other two charges in this case other
    22 than the conspiracy. The prosecution will not come forward
    23 with any recordings or e-mails or instant messages proving that
    24 Michael Kimelman knew about any insider at the time he traded
    25 3Com because no such recordings or e-mail or IMs exist. Yes,
    SOUTHERN DISTRICT REPORTERS, P.C.
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    119
    15I3GOF4 Opening – Mr. Sommer
    1 they might show you an IM or an e-mail that proves that Mike
    2 wanted to buy 3Com. He wanted to take a sizable position. He
    3 liked that deal. Okay, that’s not illegal. That’s what they
    4 are going to show you. Oh, Mike wanted to take a big position.
    5 That’s what they can prove to you. That’s not going to be
    6 disputed.
    7 Don’t read into the documents something that’s not
    8 there. Don’t guess. As with every other stock Michael ever
    9 traded, he never paid anyone for information relating to 3Com.
    10 He never talked about 3Com with anyone on a secret phone. You
    11 heard about 3Com being in the press back in that timeframe.
    12 You’ll see The Wall Street Journal article. I like to keep
    13 things simple, so let me do the same with 3Com. In order for
    14 the prosecution to prove Mike Kimelman guilty on two counts
    15 relating to 3Com, they have to prove beyond a reasonable doubt
    16 that he purchased that stock on the basis of insider
    17 information, that he was given that information by Zvi. They
    18 don’t even get to the starting line on this one, folks. As you
    19 will learn, there is no evidence that anyone, Zvi, or anyone,
    20 even recommended 3Com to Mike Kimelman as opposed to Mike
    21 making that decision himself. Yes, Mike and Zvi both traded
    22 3Com. As you will learn, so did thousands of other people.
    23 The prosecution will be up to its old tricks again, folks,
    24 guessing and hoping you will guess along with them. Guessing
    25 that Mike purchased 3Com based on Zvi Goffer saying something.
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 But there will be no evidence of that. They won’t even get to
    2 the starting line because they will be unable to present you
    3 with any evidence that Zvi was the person who even recommended
    4 3Com to Mike. I’m not talking about whether Zvi told Mike
    5 about insider information. They have to prove that, too. They
    6 will not have evidence that Zvi even recommended 3Com to Mike
    7 as an “I love this stock.” Nothing. No evidence. It is far
    8 more basic than whether Michael was told about an insider.
    9 There will be no evidence that Zvi told him about 3Com in
    10 advance of Mike’s purchases. And your inquiry will end right
    11 there. Of course, there will be no evidence that he told him
    12 about any insider as well.
    13 Can the prosecution prove that Zvi Goffer had inside
    14 information on 3Com in August 2007? That’s for you to decide.
    15 But even if you were to conclude that such was the case, and
    16 I’m not suggesting you do, but even then, they will have no
    17 evidence that he told Mike.
    18 We are now reaching the end. You’ve been very
    19 patient. I do appreciate that. I’ve tried to outline some of
    20 the main considerations I would like you to keep in mind as
    21 this trial moves forward. In a case featuring thousands of
    22 recordings over various phones where there is not one revealing
    23 Mike being told about any insider. A case featuring not one,
    24 not two, but three informants set upon Mike by the prosecution
    25 and the FBI where there is not a single recording the
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 prosecution can play for you proving that Mike was told about
    2 insiders at the time he made any trades. And don’t forget, one
    3 of those informants sat next to Mike for a year. In a case
    4 where every single person identified in this indictment had one
    5 or more secret phones to discuss what they were discussing, but
    6 where Mike Kimelman was never given such a phone and never used
    7 such a phone. A case where the prosecution says every single
    8 person in this indictment was involved with payment for
    9 information except for Michael Kimelman. A case where Michael
    10 Kimelman is accused of having purchased 3Com shares while in
    11 possession of inside information from Zvi Goffer where they
    12 can’t even prove that the idea came from Zvi Goffer.
    13 Ladies and gentlemen, when it comes to the case of
    14 United States v. Michael Kimelman, which is the third trial
    15 going on in this courtroom, the case is fatally flawed. And in
    16 my opening statement you have gotten a preview of why that is
    17 so.
    18 Do not, please, do not accept the prosecution’s
    19 invitation to guess. Be weary of their code phrase “use your
    20 common sense.” The only sense you will have to reflect on at
    21 the end of this case is that the prosecution case against
    22 Michael Kimelman doesn’t have any. That it simply makes no
    23 sense and it is not supported by evidence, and makes no sense.
    24 And when you get back to that jury room at the end of the case,
    25 I fully hope and expect you will say to each other, you know,
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 Sommer was right. The case against Michael Kimelman doesn’t
    2 make sense. The prosecution has not proved its case beyond a
    3 reasonable doubt. It has not given me a satisfactory
    4 explanation why Mike had no secret phone. It has not given me
    5 a satisfactory explanation of why Mike paid no money. It has
    6 not given me a satisfactory explanation of why he’s not on a
    7 single call and why an informant sitting next to him for a year
    8 can’t come forward with any evidence. After all the resources
    9 devoted by the prosecution and the FBI to get Mike, they’ve
    10 come to court with nothing. And they’ve asked you to guess.
    11 And when you realize that, and I’m confident you will, your
    12 duty will be clear.
    13 When a case does not make sense, when the prosecution
    14 cannot prove to you beyond a reasonable doubt that its theories
    15 are sound and logical and supported by real evidence, when the
    16 prosecution’s case leaves with all these unanswered questions
    17 that I’ve just laid out for you, a jury’s task is simple.
    18 Simple. For we dare not allow any citizen’s freedom to be
    19 taken away by any lesser standard than guilt beyond a
    20 reasonable doubt.
    21 This will be a long trial. There are going to be
    22 times when you feel frustrated, there are going to be times
    23 when you feel your time is being wasted, there are times when
    24 you feel bored. I hope this is not one of them. I promise you
    25 now that I will try my hardest not to be the source of any of
    SOUTHERN DISTRICT REPORTERS, P.C.
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    15I3GOF4 Opening – Mr. Sommer
    1 that, but I do have a man’s life in my hands, and the man’s
    2 wife and three children, and it is an enormous responsibility.
    3 I therefore will ask the questions I need to ask to make sure
    4 you understand that he committed no crime. I am going to play
    5 those tapes that I need to play to make sure you understand he
    6 committed no crime, and he acted at all times in good faith. I
    7 am going to do all I possibly can to show you what I expect
    8 will become very clear, that Michael Kimelman is not guilty.
    9 And at the end of this trial, I am going to ask you to bring
    10 this nightmare to an end for him with your verdict of not
    11 guilty. Thank you very much.
    12 THE COURT: Thank you, Mr. Sommer.
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