Top Technology Banker Indicted on ObstructionMay 13, 2003 | New Yrok Times Frank P. Quattrone, the former star technology banker at Credit Suisse First Boston, was indicted by a federal grand jury yesterday on charges that he obstructed justice and destroyed evidence.
Mr. Quattrone's legal team is expected to mount a vigorous courtroom battle against prosecutors hoping for the first criminal conviction of a financier stemming from the stock market collapse.
The charges which will be brought in the Southern District of New York before Richard Owen, who has the status of a senior judge — are broadly similar to a criminal complaint brought against Mr. Quattrone by the United States attorney's office late in April. They state that in December 2000, Mr. Quattrone, who then headed Credit Suisse's investment banking division for technology companies, endorsed an e-mail recommendation from a colleague that his bankers destroy their files in advance of an expected onslaught of civil lawsuits.
Prosecutors contend that Mr. Quattrone had been warned days earlier by Credit Suisse lawyers that regulators and prosecutors from the Southern District had issued subpoenas asking for documents concerning the allocation of hot stock offerings to Credit Suisse's prized corporate clients.
The charges are being denied by Mr. Quattrone's legal team, led by John W. Keker, a former prosecutor of Oliver L. North during the Iran-contra trial and the lawyer for Andrew S. Fastow, the former chief financial officer of Enron.
"Frank Quattrone is innocent," Mr. Keker said in a statement yesterday. "He is charged with a crime that he did not commit. We will request a speedy trial and we are confident the jury verdict will establish Frank's innocence and reaffirm his honesty and integrity."
Mr. Keker has engaged in a public campaign that suggests a possible outline of the defense. He has asked the government to prove that Mr. Quattrone had specific knowledge that the subpoenas sought documents from his investment banking department. Mr. Keker contends that Mr. Quattrone never saw the subpoenas and thus was not aware when he sent the e-mail message that the investigation into public offering practices in Credit Suisse's equities division carried over to his investment banking unit.
On April 25, Mr. Keker sent a letter to James B. Comey, the United States attorney in Manhattan, accusing him of making a misleading statement at a news conference on April 23 when he announced the criminal complaint.
At that news conference, Mr. Comey said Mr. Quattrone asked his colleagues to clean out their files, even though he knew that the subpoenas sought documents in those files. In his letter, Mr. Keker denied that Mr. Quattrone had such knowledge and asked Mr. Comey to retract his assertion.
Mr. Comey has declined to comment on Mr. Keker's letter.
The letter suggests that the underpinning of Mr. Quattrone's defense strategy will be that he was never made aware the investigation involved his investment banking division. Given that, his lawyers say, he could not have had an intention to obstruct justice when he sent the e-mail message.
Some legal experts say that the government may not have to prove that Mr. Quattrone had such specific knowledge.
In the indictment, prosecutors say that Mr. Quattrone responded to requests from Credit Suisse lawyers by supplying investment banking documents from his computer months before he endorsed cleaning out the files.
They contend, therefore, that Mr. Quattrone never needed to know of the subpoenas' actual contents; as a sophisticated department head, he should have been aware that an investigation into Credit Suisse's equities division could well include documents from his department.
"The government does not need to put the subpoenas into Mr. Quattrone's hand to prove its case," said Robert A. Mintz, a former federal prosecutor and a lawyer at the firm of McCarter & English. "All they have to prove is that he was aware of the investigations and that the destroyed documents were within the scope of the probe."
Whether prosecutors can prove that Mr. Quattrone was intent on file destruction when he forwarded the e-mail message is another matter, experts say.
Mr. Quattrone's division at Credit Suisse underwrote billions of dollars in technology stocks during the 1990's boom. He also faces a number of civil claims from NASD, the securities regulator for the Nasdaq market, as well as a continuing investigation by the New York State attorney general, Eliot Spitzer.
He was forced to resign from Credit Suisse in March.
Mr. Quattrone is expected to appear at an arraignment on May 27 before Judge Owen. Yesterday, Justice Naomi Reice Buchwald, a United States district judge, recused herself from the case but did not make her reason public.