Storied banker receives a deal

Quattrone is clear to resume career

August 23, 2006|By SCOTT DUKE HARRIS | SCOTT DUKE HARRIS,SAN JOSE MERCURY NEWS

SAN JOSE, Calif. -- Silicon Valley's storied financier, Frank P. Quattrone, won a deal from prosecutors in a New York courtroom yesterday that means an end to his legal troubles, clearing the way for him to return to the investment banking career that had made him one of Wall Street's most powerful technology bankers.

The deal represents vindication for a man who once faced an 18-month prison term for his conviction, later set aside, for obstruction of justice, as well as a "lifetime ban" from working in the securities industry.

For days, since the deal was reported imminent, Quattrone's legal victory has had valley insiders asking: Could the former top investment banker make a triumphant comeback?

"I plan to resume my business career," Quattrone said in a statement issued after the agreement was finalized in the federal courthouse in lower Manhattan in New York. He added that he was "very pleased that the case will be concluded" and looked forward to the dismissal of the charges.

Some of Silicon Valley's business leaders said they were ready for his return.

"I would hope that he would," said Dick Kramlich, general partner of New Enterprise Associates in Menlo Park, Calif., a leading venture capital firm.

Kramlich said New Enterprise did about 20 deals with Quattrone, said he saw no reason to think Quattrone's legal odyssey would leave a stigma.

As for whether Silicon Valley would welcome Quattrone back, Kramlich said, "I can only speak for ourselves. We certainly would."

"I think he can do whatever he wants to do," said Bill Burnham, a venture capitalist who worked under Quattrone at Credit Suisse First Boston and considers him a friend. "Out here in Silicon Valley, I don't think there's anybody who is not going to welcome him with open arms, and there's a tremendous amount of sympathy."

The deal was a "deferred prosecution agreement" that allows his criminal case to be dismissed without a third trial. Quattrone is required only to refrain from violating any laws and from associating with any lawbreakers for 12 months. He also must notify the government if he moves from his Los Altos Hills, Calif., home.

Such agreements are normally offered to violators of minor crimes.

"Quattrone has received the same punishment as someone who smuggled a few Cuban cigars into the United States," said Timothy J. Coleman, co-chairman of Dewey Ballantine's white-collar crime practice who recently left the U.S. attorney general's office. "If he holds up his end of the deal, it will be as if the case never happened."

The pact would conclude a three-year effort to prosecute a man who earned $100 million in one peak year at the height of the technology industry boom as he commanded his former investment firm's technology portfolio.

Yesterday's statement was the first indication Quattrone has given of his future plans. The good will that remains in Silicon Valley has many speculating that he could resurrect himself as a brand-name Silicon Valley player, perhaps in a boutique investment house.

It's a substantial turnaround from the accusations that hung over Quattrone in 2003, when he faced criminal charges of obstructing justice for forwarding an e-mail urging co-workers to "clean up" their files.

Industry regulators also accused him of violating banking rules against gifts and gratuities by doling out stock to business associates in hot startups before their initial public offerings. The list of business associates became known as "Friends of Frank," although Quattrone's attorneys say his role was minimal and he did not know most of the recipients.

Quattrone, 50, is wealthy enough to lead a life dedicated to family, lowering his golf handicap and his philanthropic pursuits, which includes the Northern California Innocence Project at the Santa Clara University Law School, a nonprofit that researches questionable criminal convictions.

Before the deferred prosecution agreement, Quattrone also had won an appeal setting aside his conviction, and a 5-0 decision from the Securities and Exchange Commission that erased a lifetime ban imposed by the National Association of Securities Dealers. The NASD had banned him for refusing to testify while his criminal case was proceeding, which his lawyers had advised him against.

The SEC later agreed that Quattrone could legitimately take the Fifth Amendment, and the NASD dropped its charges.

Legal expert Lee Altschuler, former chief of the U.S. attorney's office in San Jose, said the "witch-hunt" defense truly applied to Quattrone's case.

"He was prosecuted not so much for sending that e-mail, but for who he was and what he did," said Altschuler, now a defense attorney in Palo Alto, Calif.

"He was sort of the poster boy for Silicon Valley success, and there's an Eastern bias against the more rough-and-tumble, fast-money, quick-success, no-barriers lifestyle of Silicon Valley."

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