- The Washington Times - Friday, October 24, 2003

NEW YORK (AP) — The obstruction of justice trial of banker Frank Quattrone, whose wealth and power skyrocketed during the 1990s like the Internet stocks he helped take public, ended yesterday with jurors hopelessly divided on a verdict.

The mistrial raises the possibility that Mr. Quattrone, one of the most prominent figures in the government’s crackdown on corporate corruption, will face a second trial as early as next month.

The Manhattan jury deliberated five days, and one juror said they were inching closer to a conviction after Mr. Quattrone damaged himself by taking the stand.

But jurors ultimately could not settle the question at the heart of the case — whether Mr. Quattrone meant to hinder federal investigations in 2000 when he encouraged employees to destroy files.

“We are disappointed because Frank Quattrone is a man of integrity and a man who followed the rules,” his attorney, John W. Keker, told reporters. “Our feeling at this point is disappointment.”

Mr. Quattrone, 48, declined to comment. He made no discernible movement when U.S. District Judge Richard Owen announced the mistrial, and stood expressionless and facing forward even after jurors left the courtroom.

The focus of the criminal case is a Dec. 5, 2000, e-mail message forwarded by Mr. Quattrone to his employees at Credit Suisse First Boston, encouraging them to “catch up on file cleanup” by discarding some documents.

At the time, the Securities and Exchange Commission and a federal grand jury had asked for documents from the bank as part of a probe into how it doled out shares of the companies it took public during the dot-com stock craze.

Mr. Quattrone knew of the probe but maintains he did not believe any documents would be sought from his investment banking division. He said he was following CSFB’s document policy, which requires bankers to destroy some old files.

But the government insists Mr. Quattrone deliberately blocked the investigations, worried they could eventually wreck his lucrative business.

The mistrial presents the government with the choice of whether to bring Mr. Quattrone before a fresh set of jurors and try again for a conviction.

Michael Kulstad, a spokesman for federal prosecutors, said no decision had been made. Earlier in the trial, prosecutor Steven Peikin told the judge “my sense is we will retry the case” in the event of a hung jury.

The government will likely announce its decision at a Nov. 5 hearing.

One juror, 26-year-old Mayo Villalona, said an increasing number of jurors wanted to convict on at least one count — four on the first day, then five, and eight by yesterday. But three jurors refused to budge.

The deadlock came despite two pleas from the judge to work harder to reach a verdict. The jury had just 11 persons, one short of the standard, because one juror’s mother had a heart attack during deliberations.

Mr. Villalona said Mr. Quattrone damaged his case when he took the stand. The mustachioed former banker smiled and appeared genial under questioning from his own attorney but turned somewhat argumentative on cross-examination.

“He did a bad job going up there,” Mr. Villalona said. “I heard a lot of jurors say if he hadn’t been a witness, it would have been not guilty the first day.”

Originally, the defense sought to show that the investigations, which focused on how initial public offerings of stock were doled out, did not involve Mr. Quattrone’s division.

But when Mr. Quattrone took the stand, prosecutors presented e-mail evidence that showed he at least made suggestions on which CSFB clients should be considered for receiving shares.

The defense then shifted strategy to insist Mr. Quattrone never made any final decisions on stock allocations.

Mr. Quattrone’s lawyers cast the single e-mail message as a flimsy nail on which to hang a criminal case.

“Ask yourself if that’s how an otherwise blameless, crime-free pillar of the community commits a crime,” Mr. Keker said at trial. “Is that when a man goes off the rails, in circumstances like that, and decides that he’s going to commit a crime?”

Mr. Quattrone was the head of CSFB’s technology group. Like the prices of many dot-com stocks he helped take public, his salary had soared — from $9 million in 1998 to $120 million in 2000.

The charges against him — two counts of obstruction and one count of witness tampering — carry up to 25 years in prison, although federal guidelines would sharply reduce the prison term in the event of a conviction.

The criminal investigation into CSFB closed in 2001 with no charges filed. The bank later paid $100 million to settle related civil charges.

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