U.S. Attorney Says Insider Case Still Intact : Downplays Speculation Over Motion to Dismiss

The head of the criminal investigation of Wall Street’s insider trading scandal Sunday denied that a government request last week to dismiss charges against three men suggests any weakening in its case.

In a television interview, Rudolph W. Giuliani, U.S. attorney for Manhattan, said the government motion to dismiss charges against the three indicted Wall Street professionals was made to allow prosecutors time to expand the charges against them.

The motion last Wednesday came a day after after U.S. District Court Judge Louis L. Stanton denied a government request for a two-month delay in the trial, scheduled to start May 26.

“This is not terribly different than what happens in lots of complex cases,” Giuliani said on the ABC News program “Business World.”

Speculation Stirred

“The only difference is the judge would not give us the three weeks that we asked for to give us a superseding indictment,” he added.

The requests for a trial delay and dismissal of charges against Robert M. Freeman, Richard B. Wigton and Timothy L. Tabor has stirred speculation, fueled by defense attorneys, that the government may not be able to prove its case.

“This has been grossly exaggerated,” Giuliani said.

After the request for a delay was denied, the government wanted to file expanded charges against the three rather than go to trial on what it regards as “the tip of the iceberg,” he said.

Defense lawyers are expected to ask Stanton to dismiss the charges “with prejudice,” meaning they cannot be brought again in a new indictment.

Stanton is scheduled to rule on the motion Wednesday.

Freeman, head of arbitrage at Goldman, Sachs & Co.; Wigton, former head of arbitrage at Kidder, Peabody & Co., and Tabor, a former arbitrage trader at Kidder, were arrested at their Wall Street offices earlier in February.

No Comment on GE Shake-Up

They are charged with illegally swapping and using inside information.

Giuliani also declined to comment on whether he had any role in a reshuffling of Kidder’s top management, which was ordered last week by General Electric Co., the Wall Street firm’s parent.

Kidder has not been charged in the insider trading scandal, either by Giuliani’s office or the Securities and Exchange Commission.

The scandal has been riddled with leaks and unconfirmed press reports about the investigation.

But Giuliani denied that any of the unauthorized reports about the secret probe came from his office.