Galleon defendants seek separate trials

Lawyers for Rajaratnam, 52, and former New Castle Funds LLC trader Danielle Chiesi contended in court papers on Friday that allegations of seven distinct conspiracies to commit securities fraud failed to show they could be connected at trial.

Separately, Rajaratnam's lawyers attacked the credibility of former trader and government cooperator Roomy Khan, part of the defence strategy to try to suppress wiretap evidence.

They said Khan, who was previously convicted of insider-trading and who pleaded guilty in the Galleon case, recanted what she told FBI investigators in interviews regarding purchases of Hilton Hotels Corp stock.

Rajaratnam's lawyers said the government knew Khan, was "an inveterate fabricator" when it filed applications with the court between March and November 2008 to conduct wiretaps.

"Not only did the government fail to bring these facts to the court's attention, it claimed in two of the affidavits in support of those applications that Khan has proven to be 'reliable'," the Rajaratnam memorandum said.

Khan's lawyer said in response that Rajaratnam's "lawyers never seem to address the wiretaps."

The criminal trial of Rajaratnam and Chiesi was scheduled to start on October 25. They were arrested on Oct 16, 2009 and pleaded not guilty to an indictment unsealed two months later. Both are free on bail.

"There is an utter lack of meaningful overlap between the seven alleged conspiracies in the case," Rajaratnam's lawyer, John Dowd, said in a memorandum to U.S. District Court Judge Richard Holwell.

A spokeswoman for Manhattan U.S. Attorney Preet Bharara declined comment.