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Banker Charged With Obstructing Justice

Apr 24, 2003 | AP

A former Credit Suisse First Boston star investment banker was arrested Wednesday on charges that he obstructed justice by directing others to destroy evidence wanted by federal investigators.

Frank Quattrone was accused of urging hundreds of CSFB employees to follow the advice of a colleague to "catch up on file cleanup" before investigators looking into the allocation of initial public offering shares got too far along.

"Today, it’s administrative housekeeping.

In January, it could be improper destruction of evidence," the December 2000 e-mail endorsed by Quattrone warned, the criminal complaint alleged.

Quattrone, 47, of Menlo Park, Calif., was released on his own recognizance after briefly appearing in U.S. District Court in Manhattan. He declined comment.

His lawyer, John W. Keker, said the charges were "wrong and unfair" and called the government’s evidence against Quattrone "pretty thin gruel" on which to base criminal charges.

"Frank Quattrone is innocent. He never obstructed justice," Keker said.

U.S. Attorney James B. Comey said he wanted the charges of obstructing justice and witness tampering to be a warning for those "throwing roadblocks in the way of the investigators trying to find facts."

"In the privacy of your office, you may think that no one will ever know. If you do that, you’re playing with fire," he said.

An investigation into CSFB’s practice of allocating initial public offering shares was closed more than a year ago without charges, although there were civil penalties, Comey said.

CSFB paid $100 million in late 2001 to settle accusations by the Securities and Exchange Commission and the National Association of Securities Dealers that it had charged inflated commissions to some clients in exchange for access to IPO shares.

At the end of 2002, CSFB agreed to pay another $200 million as part of an industrywide settlement over conflicts of interest between stock research and banking.

Quattrone resigned from CSFB in early March, several weeks after the obstruction probe began and allegations emerged.

During the dot-com boom of the late 1990s, he wielded enormous influence as his annual salary neared $100 million. He presided over lucrative initial public offerings of companies such as Amazon.com and Netscape Communications Corp.

After the spectacular fall of technology in 2000, regulators and prosecutors took a closer look at the firm’s IPO practices.

Comey said the probe was hampered when Quattrone on Dec. 5, 2000, encouraged his subordinates to clean out their files even though he had learned two days earlier that a grand jury and the SEC had asked for documents in those files.

The complaint said Quattrone distributed an e-mail on Dec. 5, 2000, saying he had once been a key witness in a securities litigation case in south Texas and that he would "strongly advise" other CSFB employees to follow procedures outlining which documents should be kept or destroyed.

CSFB’s legal department sent more e-mails on Dec. 6 and 7 telling employees not to destroy IPO-related material.

Comey said CSFB had been "very, very cooperative" since the obstruction probe began. CSFB declined to comment Wednesday.

Throughout the investigation, Quattrone has maintained he did nothing wrong. In sending the e-mail, "he was following the document retention policies in force for his technology banking group at CSFB. He did not destroy any documents nor improperly direct others to do so," his lawyers said in a statement when he resigned.

Magistrate Judge Theodore Katz told Quattrone to return to court May 13. The most serious charge carries a penalty of up to 10 years in prison.


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