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Frank quattrones ace in the hole Original Source Link: (May no longer be active)
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Frank Quattrone's Ace In The Hole
Dan Ackman, 10.10.03, 8:35 AM ET
Frank Quattrone took center stage yesterday, testifying at his trial in a Manhattan federal court on obstruction of justice charges, but not before a very fine introduction from two old friends.
John Keker, Quattrone's lawyer, moved immediately to the question at the heart of the matter. "Were you intending to obstruct justice on an SEC investigation?" he asked. "No," said Quattrone.
The defrocked investment banker for Credit Suisse First Boston, a unit of Credit Suisse Group (nyse: CSR - news - people ), testified that he had no corrupt intent when he sent his two-line e-mail on Dec. 5, 2000, endorsing a colleague's advice that bankers in his technology group "clean up" their files and comply with the company's so-called document retention policy, which emphasized the routine destruction of all documents not part of the final "deal file."
He allowed that when he sent the e-mail he wasn't thinking about an earlier conversation with a top CSFB attorney who told him about a pending grand jury investigation--and, indeed, he had never been briefed on the breadth or details of the investigation he now stands accused of obstructing. (See: "Cover Up? Maybe, But Not By Quattrone.")
Quattrone, dressed in a blue blazer and tan slacks, speaking to a packed courtroom, was precise in his statements, but appeared relaxed and confident answering questions from his lawyer. By the end of the day, Quattrone was smiling and joking with family, friends and colleagues who have shown up in court in increasingly large numbers. One of those fiends was Rosario "Russ" Lamberto, the defendant's childhood neighbor and grade-school classmate from South Philadelphia.
Many of the witnesses, mostly CSFB lawyers and bankers, at the trial were cautious and timid in court, fearing the extraneous comment. Lawyers conducting the trial were often required to ask the witnesses to speak up so they could be heard throughout the cavernous ceremonial courtroom in the old federal courthouse in Foley Square where the trial is taking place.
Lamberto, 48, a printing broker who now lives in Consohocken, Penn., had the opposite problem. His voice resonated to the point where Elliot Peters, the lawyer questioning him, had to ask him to back away from the microphone. Lamberto's message was as direct as his manner. Quattrone, for all his millions, is the same guy he's known since childhood. "I would willingly place my life or the life of my wife and child in his hands," Lamberto said. In an interview later, he said that his father, his sister and his sister's husband were all in court, too.
If jurors were not impressed by the first Russ, Quattrone's lawyers offered a second: Russell B. Hall, Quattrone's friend of 24 years from Stanford Business School and Silicon Valley social and business circles. Hall, a United States Military Academy graduate, and former army officer, who has worked as consultant and venture capitalist, concluded his testimony by saying, "I think Frank Quattrone has a higher sense of honor than anyone I've met since leaving the academy." When Hall was done, assistant U.S. Attorney Steven Peiken sat down without asking a single question.
Quattrone earned $120 million in a single year from CSFB, after rising to stardom at Morgan Stanley (nyse: MWD - news - people ) and Deutsche Bank (nyse: DB - news - people ), where he helped bring companies like Cisco Systems (nasdaq: CSCO - news - people ) and Intuit (nasdaq: INTU - news - people ) public. While it may seem unremarkable that a man as prominent as Quattrone could find friends to provide character testimony, it doesn't always happen. Sometimes a character testimony can backfire when the witness admits ignorance to even innocuous circumstances of an alleged crime, making the accused seem even more dishonest because he kept his good friend in the dark.
In Quattrone's case, the defendant himself made the point that there was nothing to tell and nothing to hide. Quattrone said when he received the e-mail from Richard Char, a senior investment banker in CSFB's Palo Alto, Calif., office, where Quattrone also worked, all it said was "time to clean out those files" in accordance with the bank's policy. "I was simply seconding."
The essence of the case against Quattrone is that he, unlike Char, had been told about a pending grand jury subpoena first by e-mail and later in a phone call with David Brodsky, the CSFB lawyer. But there has been no evidence that Quattrone was ever told about the details of the various investigations of CSFB, which Brodsky described as relating to the firm's IPO allocation practices, which Quattrone insisted did not concern him or his technology group. The investigation, as far as he knew, was into how the firm's salesmen allocated IPO shares to investors, which happened in the last days of a three-to-four-month IPO process.
For that reason, Quattrone said he wasn't thinking about the grand jury or a related SEC investigation when he sent his e-mail suggesting the purging of investment banking documents.
Keker also introduced the jury to Frank Quattrone as business machine. In the one-hour period leading up to his fateful e-mail, which he sent at 6:28 P.M., he fired off more than a dozen e-mails on a possible interview with an author, a firm brochure, a departing colleague, a personal real estate deal, a computer virus, a meeting with America Online, and some business about an IPO for Accenture (nyse: ACN - news - people ), the largest such deal of a boom year. His 14-word e-mail which could land him in prison came in the midst of a rushing stream.
Quattrone's testimony will continue today and will be followed by cross-examination. But Quattrone didn't appear concerned at the end of the day. The jurors, too, were smiling as the judge dismissed them for the night. Courthouse lore has it that a smiling jury is an acquitting jury because it's unpleasant to send even a guilty man to prison. Such lore doesn't always hold true, but the government's case against Frank Quattrone looks done.
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