18-month term given ex-banker Quattrone

Former star executive is also fined $90,300 for impeding U.S. probe

September 09, 2004|By NEW YORK TIMES NEWS SERVICE

Frank P. Quattrone, the Wall Street banker whose pay and deals made him a vivid symbol of the 1990s technology boom, was sentenced to 18 months in prison yesterday for obstructing a government investigation into the allocation of hot stock offerings.

Quattrone, 48, who led the initial offerings of companies such as Amazon.com and Cisco Systems as an investment banker at Credit Suisse First Boston, is the most prominent Wall Street figure to face prison since Michael R. Milken pleaded guilty to six securities charges in 1990.

Judge Richard Owen of U.S. District Court in Manhattan handed down a significantly harsher prison sentence than the 10 to 16 months stipulated by federal guidelines, finding that Quattrone perjured himself when he took the witness stand and said under oath that he had not intended to impede the government's investigation when he sent a one-line e-mail message at the heart of the case.

"It is crystal clear that he was untruthful," Owen said.

Quattrone had asked for a lighter sentence because of his wife's 11-year illness, which wasn't disclosed, and the psychological problems of his 15-year-old daughter, Cristina.

Owen was unmoved. "There's $50 million of assets out there to take care of Mrs. Quattrone and $26 million to take care of Cristina in some trust fund," the judge said.

Owen noted that it was not unusual for family members to suffer after a husband and father was convicted of a federal crime. "That's one hell of a blow to a child," the judge said.

Quattrone, who made $120 million in 2000, was perhaps the most prominent banker in Silicon Valley during the 1990s, assembling a team that brought many of the biggest names in technology public. After that success and the bursting of the technology bubble, Quattrone and First Boston came under the microscope of regulators and prosecutors, who began investigating whether the bank was soliciting kickbacks from preferred investors, later dubbed "Friends of Frank," in exchange for access to hot stock offerings.

Such a case was never brought, but Quattrone was charged with hampering criminal and regulatory investigations when he endorsed a colleague's e-mail message in December 2000 urging his staff to "clean up those files." Quattrone's first trial ended in a hung jury in October, but he was convicted at a retrial in May.

Owen refused Quattrone's request to remain free while he appeals the case. Quattrone must surrender to federal prison authorities within 50 days. The judge also fined him $90,300 and initially asked him to make the payment immediately. "There's $50 million in the bank," Owen said. "He can't write a check today?" He then acquiesced to requests by Quattrone's lawyers to pay the fine within 20 days.

Quattrone's sentence stands in stark contrast to the one recently given to Martha Stewart, who was also convicted of obstruction of justice. In that case, Judge Miriam Goldman Cedarbaum sentenced Stewart to five months in prison, plus five months of home confinement. Stewart was allowed to remain free pending appeal.

Robert G. Morvillo, who is Stewart's lawyer, said yesterday that Quattrone's sentence was too harsh. "Is it a reasonable sentence?" Morvillo asked. "You won't find a defense attorney in town who thinks this is reasonable. The idea that Judge Owen jumped the sentence just continues the defense bar view that he is overly harsh."

Quattrone's appeal will be based in large part on several rulings Owen made that barred him from introducing certain evidence that might have been helpful to his case.

The clash continued in court yesterday and spilled out onto the street after the hearing, with Quattrone's lawyers standing in pelting rain accusing Owen of an unfair trial.

"Cases like this are why we have courts of appeals," said Mark F. Pomerantz, a partner at Paul Weiss Rifkind Wharton & Garrison in Manhattan who will lead Quattrone's appeal. "The defense was forced to try its case from the inside of a straitjacket."

"The trial judge kept out critical evidence offered by the defense," continued Pomerantz, who represented Samuel D. Waksal, the founder of ImClone Systems Inc., who pleaded guilty to insider trading. "And although the judge tied the hands of the defense, he gave the government free rein to put in irrelevant but prejudicial evidence, such as the amount of money that Frank Quattrone earned in 2000."

Owen's decision to depart from the guidelines and assign Quattrone a tougher sentence raises questions about whether it will be upheld. The Supreme Court ruled in June that Washington state violated the right to trial by jury when judges made findings that increased a convicted defendant's sentence beyond the ordinary range for the crime. While the ruling only applies to Washington state now, many judges have stuck to the guidelines.

The Associated Press and Bloomberg News contributed to this article.

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