Posted on 05/03/2004 4:27:18 PM PDT by NormsRevenge
NEW YORK (Reuters) -
Frank Quattrone, a former banker famous for taking hot technology companies public, was found guilty on Monday of obstructing federal investigations into some of the most popular stock offerings of the 1990s.
Jurors delivered their verdict after deliberating about seven hours over two days, concluding the ex-banker tried to block grand jury and regulatory investigations by forwarding an e-mail to co-workers reminding them to "clean up" their files.
It was the second trial for Quattrone, 48, who will likely face one to two years in prison at his sentencing, set for Sept. 8. The first trial ended in a hung jury.
Quattrone, who grew up in a working-class neighborhood and later earned $120 million in one year as a banker, showed no emotion as the verdict was read. But he later hugged his crying mother.
The jury convicted him of obstructing a grand jury probe, obstructing a Securities and Exchange Commission (news - web sites) probe and witness tampering.
His attorney pledged to appeal.
"We are obviously grossly disappointed. I feel like we failed Frank," attorney John Keker said outside the federal courthouse where both trials were held. "He's innocent."
Quattrone's former employer, Credit Suisse First Boston, had no comment. At CSFB, Quattrone was among the first bankers to see the coming technology boom. He once generated so much buzz that he had his own press team.
By late 2000, however, the market for hot stock offerings had dried up. Investigators began looking at whether CSFB, a division of Switzerland's Credit Suisse Group (CSGN.VX), had doled out shares of the most popular initial public offerings to hedge funds in exchange for kickbacks.
After learning about the investigations, Quattrone received an e-mail from a subordinate that began "Time to clean up those files" and reminded staff that CSFB's policy called for destroying outdated records and files.
Quattrone forwarded and endorsed that e-mail the following day -- an act that landed him in Manhattan federal court.
As the final witness in the two-week trial, Quattrone testified that he simply failed to connect the investigations and e-mail in his mind. He said he believed the investigations involved a different division of CSFB.
Juror Sheldon Silver, a receptionist from Manhattan, said the first vote by the six men and six women on the jury turned up seven guilty votes, four not guilty and one undecided.
Although Silver initially voted for acquittal, he changed positions as the jury began to discuss the case.
"Frank Quattrone was at the top and you don't get to the top without being aware of a lot of things," he explained.
"He was too well aware of what was going on to let that slip his mind," Silver added.
Acting U.S. Attorney for the Southern District of New York David Kelley said in a statement that uncovering wrongdoing in financial markets "depends upon the integrity of grand jury and SEC investigations."
Quattrone's testimony appeared to play better in this trial than it did in his first, when one juror said he damaged his chances for acquittal by appearing confrontational.
"We thought he made a good witness for himself," said juror Jonathan Miller, a software entrepreneur.
Jurors "wrestled" with whether Quattrone intended to obstruct the probes by forwarding the e-mail, Miller said. "The crux of the case was the intent of the defendant, what was in his mind."
Quattrone's testimony could not overcome several damaging pieces of evidence, including e-mails from a top CSFB lawyer expressing "extreme concern" about broadening investigations.
Jurors asked for those e-mails during deliberations. They also heard testimony read back to them in which lawyer David Brodsky recounted a phone call in which he told Quattrone the "inquiries going on were likely to lead to him being called as a witness" and advising him to retain a personal lawyer.
"Brodsky clearly played a key role," Miller said.
About eight hours after that telephone call, Quattrone forwarded the e-mail, adding 22 words and ending "I strongly advise you to follow these procedures."
Former banker Frank Quattrone exits Federal court in New York, May 3, 2004, after being found guilty of obstructing federal investigations into a hot stock offering. Quattrone was tried for a second time after a first jury was not able to reach a verdict, last fall, and is due to be sentenced on September 8. (Chip East/Reuters)
he later hugged his crying mother
I feel sorry for her. Not in the least for him.
I respectfully beg to differ. I know Frank personally -- haven't seen him in 15 years, however -- and he is not what the media tries to portray himn as. I of course have not asked him if he is guilty but as for his character -- well, he is a fine man who rose from his modest Italian roots and worked his tail off. To claim he arrogantly ran around thinking he was better than the rest of us is wrong.
Don't forget -- he wasn't lining his pockets, or making corrupt deals, like Ivan Boesky of the 1980s; or the Milliken brothers of the 1990s. The SEB needed a scapegoat for the dot.com craze and all they could find was Frank and a single email. This is not like the far more egregious excesses of the past.
No one can deny his rags-to-riches-by-sweat-of-brow story.
But he clearly and overtly broke many laws and regs...ranging from IPO allocations-as-bribes (so-called "spinning") to the obstruction of justice by directing the destruction of emails. These are neither subtle nor ambiguous actions. They are not the mark of humble and honest man.
he wasn't lining his pockets
That's just not true. His comp was enormous.
As for his being nailed for a "small" item like the emails, recall, Al Capone went to prison not for murder or bootlegging, but for tax evasion, because that was all they could get him on.
Frank, who was no doubt a personable fellow, seriously corrupted the capital raising function in both fact and perception. He broke the law, and he called into question the efficacy of capitalistic decision processes in a time when people like Hillary are looking to further restrict our property rights. His actions put ALL of us at further risk of plunder.
But if Frank was spinning they would've indicted him for such.
Getting paid an exorbitant amount of money is not the same as "lining one's pockets," as you state. One is stealing and the other is being extremely (even excessively) successful. Only an unrepentant leftist would claim that Frank Quattrone, or Bill Gates for that matter, is "lining his pockets" at the expense of the consumer. They're just being damn good businessmen and maximizing their financial return.
Unless you know more personally about this case, or know Frank, I don't hold your opining in very high regard.
My beef is with capitalists who, by acting outside the law, give honest capitalists a bad name.
QUATTRONE'S CONVICTION OVERTURNED
Quattrone's Successful Appeal a Victory against Persecution of Capitalists
March 20, 2006 -- A three judge federal appeals court today unanimously threw out the May 2004 obstruction of justice conviction of financial entrepreneur and innovator Frank Quattrone. This decision is a victory against the persecutors of capitalists and a first step toward making right a serious injustice."
Quattrone's was a premier case of anti-business prosecutors who could find no misdeeds by the targets of their persecution and so, instead, indicted them for covering up a crime that they did not commit. Prosecutors could find no illegal activities such as kickbacks or fraud on the part of Quattrone. Thus they accused him of obstruction based on several emails, sent at a time when he knew of no accusations against his division. Those e-mails merely instructed his staff to make certain that their files were in order and informed them that year’s end was the "time to clean up those files" in accordance with regular company policies.
The appeals court judges found that the original presiding judge, Richard Owen, had given the jury improper instructions. For example, he allowed the jury to convict Quattrone of obstruction "regardless of whether he intended such." A 2003 trial of Quattrone on the same charges resulted in a hung jury. Prosecutors still might retry him.
But the appeals court judgment points to the reckless nature of prosecutors who, in the wake of business scandals, look not to bring to justice real thieves but, rather, make examples of the prominent and successful because they are prominent and successful. It also points to the perversion of the law. Zealous prosecutors see any attempt to resist their twisting innocent business practices into illegal conspiracies--that is, any attempts by businessman to refuse to acquiesce in their own martyrdom--as evidence of obstruction of justice.
Quattrone is a true American hero. His innovative financial techniques allowed him to launch initial public stock offerings for such Silicon Valley successes as Cisco Systems and Netscape as well as Amazon.com. Rather than be rewarded, he became the target of envy.
While the appeals court decision is most welcome, more producers and entrepreneurs in America must stand up for their rights and refuse to accept unearned guilt if they are to save not only themselves but also the system of free markets and rule of law that offer them and all Americans the opportunity to live in peace and prosperity.
Edward Hudgins,
Executive Director,
The Objectivist Center and The Atlas Society
at http://www.objectivistcenter.org/showcontent.aspx?ct=1663&printer=True
Thanks. I saw the announcement of Frank's situation in today's news. But the Freeper you need to send your references to is the butthead who was just angry at Frank for being successful, NativeNewYorker.
You had him nailed; he was looking for a fight. He obviously believes the law defines morality, that all laws are good laws, and that prosecutors are saints, above persecuting people for ideological or personal reasons. With 100,000 FReepers, I have no desire to go out of my way to straighten out the defiantly nutty ones!
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