Board stiff: Gupta’s deal with the feds

Bye, bye Raj Rajaratnam!

In case you don’t recognize the name, Rajaratnam is the head of a hedge fund called Galleon Group. But he’ll probably be spending the next umpteen years in prison for trading on confidential information given to him by an executive at Intel who probably didn’t know any better and by a director of Goldman Sachs who should have.

The Goldman director is Rajat Gupta.

Today I’m going to concentrate on Gupta and all the trouble he is already making for Rajaratnam — and, more importantly, could make for others.

Yesterday Lloyd Blankfein — the chairman and chief executive of Goldman — took the witness stand and explained during the prosecutor’s gentle prodding that Gupta, as a company director, was privy to a whole lot of confidential information that people on Wall Street could use to make money.

The government alleges that Gupta tipped Rajaratnam off to certain things about Goldman, including the fact that the firm wasn’t doing as well as others on Wall Street believed and that it would be getting a huge infusion of capital from billionaire savior Warren Buffett.

When Rajaratnam’s defense lawyer, John Dowd, gets his chance he will undoubtedly claim his client didn’t realize he was getting non-public information from Gupta or he certainly would have plugged his ears and hung up the phone.

But this case could be like one of those Russian Matryoshka dolls. They’re those round wooden dolls that nest inside each other until you get to the tiniest, most fascinating one.

Layers and questions. That’s what this insider trading case creates.

Like, why wasn’t Gupta, the Goldman director, indicted by the Justice Department alongside his buddy Rajaratnam?

And why, before Blankfein testified yesterday, did Preet Bharara, the US Attorney in charge of the case, say he didn’t want anyone asking whether Goldman “is presently the subject of any pending investigations by either the Department of Justice or the US SEC?”

Bharara also didn’t want any questioning about whether Goldman bore any responsibility for the financial crisis.

I spoke with white-collar lawyer Stuart Slotnick yesterday and he said Bharara might simply be trying to keep prejudicial material out of the case. Perhaps Bharara thinks this case is a lock and there’s no reason to go too far afield in the questioning.

Or maybe there’s something else here. Maybe there’s another layer to this case.

“It remains to be seen if Gupta will cooperate with the government on further charges,” said Slotnick, who doesn’t have a client involved in this case.

Remember Gupta was not indicted by Justice for insider trading despite the fact that he was heard yesterday on a wiretapped phone call giving Rajaratnam inside information.

So it appears that Gupta has worked out some sort of government deal.

But what could Gupta possibly give to the government in exchange for such benevolent treatment?

Come on! Think hard! You’ve watched enough episodes of “Law & Order.”

Remember, Gupta was a trusted director of Goldman.

Could anyone in that firm actually have flouted the law when its stock price was tumbling and its very existence could have been in doubt?

Let’s go back to an investigation I’ve already conducted — the phone calls between Blankfein and government officials, particularly Treasury Secretary Hank Paulson, during 2008 and 2009.

In case you’ve forgotten, Blankfein and Paulson were phone buddies during those days. On one day alone — Sept. 17, 2008 — Blankfein and Paulson spoke six times.

The Treasury secretary spoke with Federal Reserve chief Ben Ber nanke only seven times that day. The Treasury secretary would have the best inside in formation during a crisis.

And, I’ll argue, it would have been virtually impossi ble for Paulson to have avoided conveying confidential information to Blankfein during those phone calls.

If Blankfein brought up any of the information he gleaned from Paulson at Goldman board meetings, Gupta would have known. And if Justice twists Gupta’s arm even a little, he’ll cooperate.

There would, of course, be a certain hypocrisy in putting Rajaratnam in jail for getting bits of information from someone at Goldman while ignoring the mountain of information Goldman’s Blankfein was getting from Washington.

Perhaps that’s why nobody is allowed to ask whether Goldman Sachs is under investigation. jcrudele@nypost.com