Lesson from Quattrone Retrial: Don’t Cover Up Your Crimes

The retrial of Frank P. Quattrone suggests that prosecutors are focusing on the cover-up of the crime rather than the crime itself.

Rather than mire a jury in the complexity of financial transactions and other details, prosecutors are filing charges connected with the straightforward question of whether the defendant lied to the government or hindered its investigation, the New York Times reported.

It’s a strategy that apparently appeals to jurors, who on Monday convicted Quattrone, a former investment banker, of two counts of obstruction of justice and one count of witness tampering for his attempt to hinder an investigation into his firm. His first trial ended in a hung jury in October.

Jurors in the Martha Stewart case sent the same message, finding her guilty of lying to regulators about why she sold her ImClone stock just before the value dropped. She was not tried on charges of insider trading.

"The substantive conduct may be somewhat ambiguous,'' said Zachary Carter, a former federal prosecutor who now practices at Dorsey & Whitney in New York, "but the obstructive conduct may be clear."

"Any time cases involve either complicated financial transactions or issues of intent,'' Carter told the Times, "those are going to be the cases where the jury is going to entertain some doubts. And any time the prosecution is in the position to simplify complicated cases for the jury, they're going to be better off."

For Quattrone, the central issue of federal investigations was whether his group at the Credit Suisse First Boston (CSFB) received excessive commissions from hedge funds in exchange for hot new stock offerings. That was not the focus of his retrial, however, which centered on a single, two-line e-mail message he forwarded from a colleague urging staffers to "clean up" their files. The e-mail went out Dec. 5, 2000, two days after Quattrone learned a federal grand jury was investigating how CSFB allocated initial public offerings.

"Jurors are saying, ‘Even if you're powerful and wealthy, don't even think about influencing the government's efforts to investigate,’ " Orin Snyder, a former federal prosecutor, told the Times. Snyder now practices in New York at Manatt, Phelps & Phillips, the national law firm based in Los Angeles.

The convictions of Quattrone and Stewart in particular, Snyder said, "send a loud signal to Wall Street that says, if you or your company or anyone in your vicinity is under investigation, do not do anything that could be interpreted by anyone as interfering in any way with that."

Some of the jurors who convicted Quattrone said the prosecution’s star witness, David Brodsky, formerly a top lawyer at CSFB, offered convincing testimony when he said he warned Quattrone about the criminal probe in the days and even hours before he sent the e-mail, the Associated Press reported. Some also said they did not believe Quattrone’s contention that he wasn’t thinking about the federal investigations when he hit the ‘send’ button.

"Frank Quattrone was at the top," said juror Sheldon Silver, 58, a public-relations firm receptionist. "You don't get to the top without being aware of a lot of different things."

Quattrone, who faces about one to two years in jail, plans to appeal. Sentencing is set for Sept. 8.

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