NEW YORK – A former hedge fund manager insisted he berated nearly everyone when he was pressed Tuesday to explain why he mocked a California consultant who he said made him millions of dollars by feeding him inside information about technology stocks.
Noah Freeman spent most of his third day on the witness stand at Winifred Jiau's insider trading trial being cross-examined, sometimes about the nasty things he said behind Jiau's back.
"I mocked a lot of people," Freeman said of his work as a fund manager in a profession that he quit last year to become a high school teacher.
Prosecutors called him to build their case against Jiau, who was arrested in December on charges that she conspired to accept cash and gifts to feed inside information to hedge funds. Jiau, of Fremont, Calif., was among 13 people arrested in a crackdown on those in the securities industry who pass along inside information as if it were legitimate research. A guilty plea was entered Tuesday by a ninth defendant in a separate proceeding.
Jiau worked for two years as a consultant for Primary Global Research, a Mountain View, Calif.-based company. Born in Taiwan, she is a U.S. citizen, though she has remained jailed since her arrest, unable to make $500,000 bail.
A defense lawyer asked Freeman if he singled out Jiau for criticism because she had a Taiwanese accent. He then asked whether he mocked his male sources the same way.
Freeman said he did, regularly. He said he called a German client "The German" because of his accent and also ridiculed Taiwanese sources for their accents and appearances.
Freeman was asked if he once paid for prostitutes for a male source he was entertaining at a Taiwanese bar.
He acknowledged spending several thousand dollars on the bill but said "I was never sure what happened" after everyone left the bar.
The testimony came a day after Freeman said on the witness stand that he received inside information from dozens of employees of public companies after he began working with expert networking firms in early 2005.
He said he rewarded Jiau with $5,000 a month in cash as well as gifts because her information was "absolutely perfect."
He acknowledged sending her an iPhone, a dozen lobsters and a $300 gift certificate to a clothing boutique, though he said she later insisted they cancel the gift certificate and make it for a restaurant near her home. Prosecutors unveiled an email in which Freeman told his secretary to ship the lobsters to Jiau.
"I know you hate her, but we have to do this," Freeman wrote. The secretary wrote back: "Sure thing, I hope she gets sick from the lobsters."
Freeman said they spoke disparagingly about her because she frequently canceled appointments or did not pick up her phone when they called.
"Despite the fact that her information was very, very accurate, Ms. Jiau was very, very difficult to work with on a day-to-day basis," he said.
Prosecutors also showed the jury an email the secretary wrote after Jiau failed to pick up the lobsters at the overnight delivery office.
"Typical of Winnie to leave 12 lobsters to die at Fed-Ex. She has no heart," the secretary wrote.
At one point, U.S. District Judge Jed Rakoff questioned how difficult Jiau was.
"Excuse me," the judge interrupted. "How much money were you making from the inside information provided by Ms. Jiau?"
Freeman responded that he made as much as $5 million in one quarter on one of her inside tips.
"And you thought it was in poor taste when she asked you for more gifts, or for different gifts?" the judge asked.
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