Banker’s Appeal Is Heard

Former Silicon Valley investment banker Frank Quattrone’s conviction on obstruction of justice should be overturned because of insufficient evidence, improper jury instructions and a trial that was “rife with error,” his lawyer told a federal appeals court Tuesday.

Quattrone’s case is being watched closely by other white-collar defendants and their lawyers. Legal experts believe that the ex-banker’s odds of winning his appeal was improved by the U.S. Supreme Court’s decision in May to overturn an obstruction conviction against accounting firm Arthur Andersen.

In the Andersen case, the Supreme Court found that the trial judge erred by not requiring the jury to find that the company had a criminal intent to engage in wrongdoing. Quattrone’s defense claims that his trial judge made a similar mistake.

“The Supreme Court ruling in Andersen definitely bolsters Quattrone’s chances on appeal,” said Jacob Frenkel, a partner at Rockville, Md.-based law firm Shulman, Rogers, Gandal, Pordy & Ecker. “If any one [white-collar] case stood a good chance of reversal, it’s this one.”

Quattrone helped bring an array of high-profile technology companies public, including Amazon.com Inc. and Cisco Systems Inc. He was convicted in May 2004 of obstructing federal investigations into alleged kickbacks from initial public offerings by urging staff members to purge documents from their files.

On Tuesday, attorney Mark Pomerantz told the U.S. Court of Appeals for the 2nd Circuit that Quattrone thought the probes by securities regulators and a federal grand jury centered on other units of his company.

Quattrone was unaware that a grand jury subpoena called for documents from his technology banking group, Pomerantz told the three-judge panel.

David Anders, the assistant U.S. attorney who prosecuted Quattrone, countered that Quattrone had been informed several times about various IPO probes and learned about the existence of the grand jury subpoena only two days before encouraging the document cleanup in an e-mail message to his staff.

“He was told repeatedly that his documents were requested,” Anders said.

Quattrone was found guilty of two counts of obstruction and one count of witnesstampering after an 11-day trial. An initial trial in late 2003 ended in a hung jury.

He was originally sentenced to 18 months in prison, but the appeals court has allowed him to remain free pending its ruling, which is expected this year.

In the Andersen case, the Supreme Court found that the trial judge gave improper jury instructions. Rather than requiring jurors to find that the firm knew it was engaging in wrongdoing by destroying documents related to its work for Enron Corp., the judge set a lower standard that it simply “impeded” the probe.

In court filings, Pomerantz argued that the Quattrone jurors should have been told that they could convict his client only if it was proved that Quattrone knew the grand jury subpoena sought documents from his group and that he intentionally sought to thwart the probe by sending his e-mail. Since jurors were not so instructed, he said, they could not have found criminal intent.

The judges subjected both sides to sharp questioning.

When Pomerantz argued that Quattrone didn’t know that documents from his group were being sought by the grand jury, Judge Richard Wesley interrupted him to ask, “To say he didn’t know about a grand jury subpoena is a bit disingenuous, isn’t it?”

Later, Wesley grilled Anders about whether he unfairly impugned Quattrone during cross-examination by hinting that he broke securities laws in his handling of one IPO -- saying that prosecutors sometimes push the envelope in challenging defendants on the stand. Anders said his questioning was proper.

Quattrone’s case revolved around an e-mail he wrote to his staff at Credit Suisse First Boston’s technology group in Palo Alto in December 2000. The two-line missive encouraged his subordinates to comply with an e-mail sent by another banker telling them to “clean up” their files.

Prosecutors said Quattrone was trying to coax his team to destroy documents sought in probes into whether CSFB, a Wall Street powerhouse, forced customers to pay kickbacks for shares of hugely profitable IPOs in the late-1990s bull market.