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Quattrone Accused of Blocking Probe

Oct 1, 2003 | AP

Star investment banker Frank Quattrone was sufficiently influential to order employees to destroy documents and hinder a federal investigation, prosecutors told a jury.

Quattrone's lawyer portrayed him as a responsible, diligent worker who was simply following a company policy that required staffers to get rid of old documents.

The arguments came Tuesday at the opening of Quattrone's trial on obstruction of justice charges called the most closely watched financial trial since that of 1980s junk-bond king Michael Milken.

Steven Peikin, an assistant U.S. attorney, told jurors in Manhattan federal court that Quattrone tried to block the federal probe in 2000 because he worried it would interfere with his livelihood.

"He chose to put the full weight of his power and position behind this document destruction effort," Peikin said.

Quattrone made tens of millions of dollars a year at Credit Suisse First Boston during the 1990s, helping take technology companies public during the dot-com boom.

He is accused of encouraging CSFB employees to get rid of documents that were being sought by a grand jury and regulators looking into how CSFB doled out shares of initial public offerings.

Peikin, making the government's opening argument, displayed a blown-up image of an e-mail sent by Quattrone on Dec. 5, 2000, that is at the center of the government's case.

In the e-mail, Quattrone attached a note written by another CSFB employee that urged workers to clean out their files for the holidays. Quattrone attached his own note "strongly" encouraging the cleaning.

The government contends Quattrone knew federal investigators, even a federal grand jury, were looking into CSFB and that the company's own policy told workers to keep all documents in the event of such an investigation.

"But Mr. Quattrone chose another path, a path that violated the law," Peikin said.

Quattrone's attorney, John W. Keker, insisted his client was doing no more than directing his employees to follow company rules. He said Quattrone would take the stand later in the trial.

"Frank Quattrone, when it comes to evidence and subpoenas, does what he is told," Keker said.

The e-mail is just one of more than 200 that Quattrone sent and received on Dec. 5, his lawyer said, attempting to show that Quattrone was a responsible worker handling dozens of different subjects that day.

The federal probe into how CSFB issued IPO shares was closed in 2001 with no charges filed.

A jury of six men and six women is hearing the case. One of them is Kenneth Guentner, who identified himself during jury screening as an officer of the Federal Reserve Bank of New York and who said his wife is also a Fed banker.

The charges against Quattrone carry penalties of up to 25 years in prison, but he would likely get a far lighter sentence under federal guidelines if convicted.

Meanwhile Tuesday, jury selection continued in state Supreme Court in the trial of former Tyco CEO Dennis Kozlowski and former chief financial officer Mark Swartz, who are accused of looting the company of $600 million.

Lawyers have selected a pool of about 120 prospective jurors from the 365 screened in the past two days.

Justice Michael Obus said he would continue prescreening in chambers with lawyers and defendants present, rather than in open court.

Following this announcement, a reporter asked the judge why he was questioning jurors in chambers. The judge replied that the questioning was minimal and that formal jury selection would take place in open court.


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