Judge declares mistrial in trial of Credit Suisse's ex-star banker

8 of 11 jurors reportedly voted to convict Quattrone

October 25, 2003|By NEW YORK TIMES NEWS SERVICE

NEW YORK - A federal judge declared a mistrial yesterday in the obstruction of justice trial of Frank P. Quattrone, the Wall Street banker who was one of the most prominent figures in the 1990s technology boom.

The decision by U.S. District Judge Richard Owen came after the jury reported that it remained deadlocked on all three counts after six days of deliberations.

The 11 jurors had notified the judge late Thursday that they could not reach agreement, but he asked them to try again for "a couple of hours" yesterday, without success.

One juror, Mayo Villalona, later said that as many as eight jurors had wanted to find Quattrone guilty on all three counts. Villalona, who supported an acquittal, said that if Quattrone had not taken the stand in his own defense, he probably would have been found not guilty.

Quattrone, 48, left the courthouse stone-faced and did not make a statement.

His lawyer, John W. Keker, said, "We are disappointed because Frank Quattrone is innocent."

Prosecutors have previously indicated that they would seek to retry Quattrone if no verdict was reached. But Michael Kulstad, a spokesman for the prosecutors, said yesterday that no decision has been made, according to the Associated Press. A hearing has been set for Nov. 5.

The mistrial was a setback for the government, given the high profile of the case.

The office of the U.S. attorney in Manhattan has long been in the front line of prosecution for corporate and Wall Street misconduct. The office, for instance, has been preparing an obstruction of justice case against Martha Stewart that has some echoes of Quattrone's case.

Quattrone, 48, who led the initial stock offerings of companies such as Amazon.com and Cisco Systems, has been the most prominent Wall Street criminal defendant since Michael Milken, who pleaded guilty to six criminal charges of securities violations in 1990. Like Milken in his day, Quattrone, who earned as much as $158 million during the peak of the dot-com bubble, has been seen by a number of commentators as the personification of the late 1990s boom.

But in this case, prosecutors failed to convince the jury that Quattrone sought to obstruct a government investigation by sending an e-mail message to his staff endorsing a colleague's directions to "clean up those files" just days after learning of the inquiry.

The prosecution tried to show that Quattrone chose to "encourage his employees to clean out their files even though he knew that there was a grand jury subpoena seeking some of those files," as David Anders, an assistant U.S. attorney, said in his closing statement. "That choice was criminal."

Prosecutors presented evidence that Quattrone was told Dec. 3, 2000, about grand jury and Securities and Exchange Commission investigations, and sent the e-mail message to the technology investment bankers at Credit Suisse First Boston sanctioning the destruction of documents Dec. 5.

Throughout the trial, Quattrone contended that when he sent his e-mail message he was unaware of the scope of the investigations. He testified that Credit Suisse's general counsel at the time, David M. Brodsky, told him that the investigation "was about hedge funds, commissions and allocation" - activities his investment bankers were not involved with.

Quattrone insisted repeatedly that if Credit Suisse's lawyers had told him the document retention policy was suspended, he would never have sent the e-mail message in question.

Under prosecution questioning, Brodsky testified that he told Quattrone "the investigation is going to turn in the direction of getting information from you" during a phone call the same day that he sent the Dec. 5 e-mail message.

By happenstance, Richard Char, a banker at Credit Suisse, had proposed to his superiors a day earlier that they send out a notice reminding the investment banking staff of the document retention policy. Char was concerned about the possibility of civil lawsuits after the collapse of many technology stocks the bank had underwritten.

"Today, it's administrative housekeeping. In January, it could be improper destruction of evidence," Char wrote in his proposal to two of his superiors.

The message had been copied to Quattrone and Adrian Dollard, a Credit Suisse lawyer based in the firm's office in Palo Alto, Calif.

John C. Hodge, Char's supervisor, told him to send out the e-mail message under his name as well as that of another colleague, Bill Brady.

Quattrone, replying to Char's proposal, wrote: "You shouldn't make jokes like that on e-mail" - an apparent reference to Char's line about destruction of evidence.

Brodsky testified that he had his telephone conversation the next day with Quattrone, telling him more about the investigations and that he might need to hire a personal lawyer because he could be called as a witness related to the investigations.

At the same time, Credit Suisse's lawyers in New York told Char separately that he should not have sent the notice and that they would send out a notice rescinding Char's message that day. They did not do so until two days later. But the evening of Dec. 5, before Quattrone left the office, he pressed "reply-to-all" on Char's message that had already gone out and endorsed it.

"Having been a key witness in a securities litigation case in south Texas," Quattrone wrote, "I strongly advise you to follow these procedures."

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