Oct. 29 (Bloomberg) -- A surprising number of otherwise smart people find themselves remarking on the phone that they hope the line isn’t tapped.

“Here’s how scared I am about what I’m gonna tell you,” Danielle Chiesi, a portfolio manager at hedge fund adviser New Castle Funds LLC, told a confidante last year. “I swear to you in front of God, you put me in jail if you talk.”

Chiesi wasn’t scared enough. She kept talking, a transcript of the exchange shows. Federal agents kept recording, and now snippets of her phone conversations appear in a criminal complaint accusing her and others of insider trading. Charging six people so far, the case rests largely on what they said over the phone.

It’s the first time phone taps have been used in an insider trading case, according to Manhattan U.S. Attorney Preet Bharara. If these people are found guilty, it will probably be because their own words convicted them.

“I just got a call from my guy,” Chiesi said to Mark Kurland, a New Castle general partner, about someone inside a Massachusetts-based company, Akamai Technologies Inc., according to the complaint. “They’re going to guide down.”

She reported to Kurland and to another phone buddy now criminally charged, Galleon Management founder Raj Rajaratnam, that her source at Akamai told her the company expected a 20 percent drop in its share price to $25.

“Just keep shorting,” she said.

Radio Silence

Rajaratnam said he would be “radio silent” about the whole thing. They weren’t silent enough, as the feds recorded that, too.

The defendants were wary of writing incriminating e- mails, their conversations show. But now that neither e- mail nor phones are safe for those who fear the government is watching them for securities crime, some Wall Streeters wonder how they are supposed to communicate.

In person? Too slow.

Besides, at the rate the feds are going, you could still wind up on video. Agents use hidden cameras in all sorts of criminal investigations. Why not insider trading?

Once they persuade a judge to let them install a camera, they could catch a range of embarrassing moments.

That is what happened in 1988 when a government camera hidden in the back room of a Los Angeles jewelry store allowed agents to peer into what they rightly figured was a counting room for an immense, international drug money laundry.

On-Camera Activity

Beyond the astounding sums of money that Drug Enforcement Administration agents saw store employees haul into the room, count and bag, the camera revealed another type of illicit activity.

One day the married store owner and a young woman employee had been counting cash when they disappeared into the camera’s blind spot. When they re-emerged into the camera shot, she was no longer wearing a blouse.

Fondling ensued, and the agents realized the couple was using the counting room for illicit sex. We know this because the camera and video recorder kept running, as the agents’ supervisor instructed them that as long as there was cash on the table, they should keep watching.

(The agents involved told me this and lent me the tapes for a book I was writing.)

So, to sidestep the government’s watch, don’t stay put when you conspire in crime. Walk around and talk, right? But can you be sure the other guy isn’t wearing a wire?

Foreign Language

Maybe you should consider chatting in a language other than English.

The FBI doesn’t have nearly enough translators, and most of those it uses aren’t properly trained, according to a report earlier this month from the Justice Department’s inspector general.

Thousands of hours of conversations stack up each year with no one to listen to them. One quarter of last year’s FBI audio tapes weren’t reviewed, and almost a third of the electronic files were essentially ignored, the inspector general said.

The report offers no clue as to which languages are most likely to evade translation, but it seems that almost any non- English language would do. The FBI fell short of hiring goals in 12 of the 14 languages it considers critical.

You might also note that of the roughly 17,600 applications for intercepts approved for state and federal prosecutors over the past decade, by far the biggest chunk was for narcotics investigations, reports the Administrative Office of the U.S. Courts.

As for securities offenses, there were so few intercept applications for that kind of case that they don’t show up as a crime category in the analysis for 1998- 2008.

Ah, but that was then.

The case filed this month alleging a many-tentacled insider trading conspiracy opens a new category.

These days, the best way Wall Streeters can keep their conversations out of a federal indictment is the old- fashioned, low-tech way: Resist trading on insider knowledge and tell clients the same thing you tell your confidantes.

And no matter what, it’s always a good idea to keep hands off subordinates and to keep clothes on at the office.

(Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.)

To contact the writer of this column: Ann Woolner in Atlanta at awoolner@bloomberg.net.

Last Updated: October 28, 2009 21:00 EDT