The government alleges Rajaratnam, whose Galleon Capital had as much as $7 billion under management, was involved in gathering inside information on such companies as Polycom Inc., Google Inc., and Hilton Hotels Corp. Using that information gathered in from January 2006 to July 2007, Rajaratnam made trades that earned his firm more than $12.7 million, the Wall Street Journal reports.

In another instance, Chiesi, of New Castle, got inside information on Advanced Micro Devices and Akamai Technologies from an Akamai executive and Moffat, of IBM. She passed the information to Rajaratnam, who slipped her information about AMD. New Castle made a profit of $2.4 million as a result.

But while Rajaratnam was allegedly sitting in the middle of a network of information gatherers, the government was gathering information of its own.

Bloomberg reports prosecutors have been investigating the case since at least November 2007, when an unnamed source began meeting with FBI agents. The person has pleaded guilty and is cooperating, and told agents he had been using inside information since 2006 and had tipped Rajaratnam.

Tips came to investigators from people at hedge funds, investor relations firms, Intel, McKinsey and the companies whose stocks were traded in the schemes.

As their investigation progressed, the government tapped several phones used by the suspects, the first time wiretaps have been used in an insider trading case. The wiretaps show a new level of aggressiveness in going after Wall Street’s white collar criminals, Bharara said.

Now, the government is willing to use the same tools against errant hedge fund managers as it does against the tough guys of the streets.

"Out of all the secret information that was passed, there was one secret they did not know: that we were listening," Bharara said. "This case should be a wake up call for Wall Street. It shows that we are targeting white-collar insider trading rings with the same powerful investigative techniques that have worked so successfully against the mob and drug cartels."