Prosecutors confronted banker Frank Quattrone on Friday with evidence he helped Dell Computer founder Michael Dell secure shares of a new public company at bargain prices, a day after the defendant denied any role in such deals.
As jurors viewed copies of e-mail exchanges with Dell, the former Credit Suisse First Boston executive appeared to reverse himself when asked by Assistant U.S. Attorney Steve Peiken, “Did you make IPO allocations?”
“Yes,” the defendant replied.
But when asked whether he was “quite involved” in the deals, he said, “No.”
Testifying in his own defense at a federal obstruction of justice case in Manhattan, Quattrone had told jurors on Thursday that he was not frightened by the prospect of an investigation at Credit Suisse because it was in a “different division of my bank.”
On Friday, Peiken questioned Quattrone about an e-mail he wrote to Dell on July 19, 2000, about the pending public unveiling of shares in Corvis Corp., a telecommunications equipment provider based in Columbia, Md.
He told Dell he enjoyed breakfast with him a month earlier and had gotten word that Dell was personally interested in obtaining shares of Corvis for a fund called Dell Ventures.
“Given the intense interest in this space we anticipate this will be a complete zoo, so I wanted to check if your interest was really there and if so what I could tell my syndicate desk about your holding horizon,” Quattrone wrote.
“Frank, it was great to see you too,” Dell wrote back. “We would like 250K (250,000) shares of Corvis.”
In later e-mails between Quattrone and Dell or his representatives, it was agreed that a fund controlled by Dell would receive 100,000 shares. Dell’s representatives indicated they would not sell shares fast and planned to buy more in the open market.
The cross examination of Quattrone came after he accused the prosecution’s key witness earlier Friday of failing to warn workers not to destroy files amid investigations of the firm.
Quattrone said company lawyer David M. Brodsky told him Credit Suisse might be embarrassed by some e-mails he had exchanged in early December 2000. In one, Quattrone warned CSFB employees to clean out their files, prosecutors say.
Brodsky has testified that he told Quattrone regulators and prosecutors were investigating the company and he should get a lawyer because he might be questioned.
But Quattrone said Friday that Brodsky did not tell him about a government subpoena for documents until two days after he sent the e-mail directing workers to routinely clean out their files.
“Mr. Brodsky was going to be embarrassed because he hadn’t told people to preserve documents that were required by the subpoena,” he said.
Quattrone said he was never disciplined or reprimanded in any way for his e-mail and that he never thought it would cause people to destroy subpoenaed documents. “Not for a moment,” he said.
On cross-examination, prosecutors elicited humble answers from the banker who made more than $120 million in 2000 alone.
Asked if an investment banker has to be smart to succeed, he answered, “Not necessarily,” eliciting laughter throughout the courtroom. Asked if he was a good salesman, he said, “I don’t know.”
Investigations of CSFB focused on whether kickbacks were accepted in exchange for letting some clients buy shares of hot initial public offerings. The probe closed in 2001 with no criminal charges brought, and CSFB paid $100 million to settle civil charges without admitting wrongdoing.
Quattrone was among the most influential bankers during the late 1990s, helping take companies like Amazon.com and Netscape Communications Corp. public.
Quattrone is charged with obstruction of justice and witness tampering. The charges carry a potential prison sentence of up to 25 years, but he would likely get far less under federal sentencing guidelines if convicted.
Cross examination was to resume Tuesday and closing arguments were scheduled for Wednesday.