Mistrial In Top Banker's Case

A federal judge declared a mistrial Friday in the obstruction of justice trial of Frank Quattrone, one of the nation's leading technology bankers during the Internet stock craze.

The decision by U.S. District Judge Richard Owen came after jurors reported they were deadlocked on all three charges against the former financial star — two counts of obstruction and one count of witness tampering.

"This particular trial is over," Owen said to jurors. "Thanks for your service."

Federal prosecutors, who earlier indicated that a retrial was likely in the event of a mistrial, said outside court that no decision had been made.

Quattrone, 48, showed no reaction as the mistrial was declared, and declined to comment afterward.

The case centered on an e-mail written by a subordinate and forwarded by Quattrone to his staff on Dec. 5, 2000, that encouraged employees to "catch up on file cleanup" by destroying some documents.

Quattrone added a brief endorsement to the e-mail that concluded: "I strongly advise you to follow these procedures."

Federal prosecutors contended Quattrone was aware at the time that regulators and a federal grand jury were conducting an extensive investigation of his bank, Credit Suisse First Boston, and that he was deliberately trying to block it.

The charges carried a potential sentence of 25 years in prison — although Quattrone would have received a much lighter term under federal sentencing guidelines if convicted.

The mistrial came on the sixth day of jury deliberations. Jurors had reported to the judge after just two days that they were sharply divided, but the judge urged them to try harder to reach consensus.

Deliberations were held with just 11 jurors, one short of the standard 12, because one juror's mother had a heart attack on the day closing arguments ended.

Quattrone was the highly successful head of CSFB's technology group in 2000. Like many of the dot-com stocks he helped take public, his salary had skyrocketed — from $9 million in 1998 to $120 million in 2000.

At the time he sent the e-mail central to the case, securities regulators and a federal grand jury were looking into whether CSFB clients paid the bank illegal kickbacks so they could get in on hot new stocks.

The investigation was closed in 2001 with no criminal charges filed, and the bank paid $100 million to settle related civil charges without admitting wrongdoing.

At the trial, prosecutors painted Quattrone was a man bent on protecting his lucrative business and driven to make sure documents that could have haunted the bank were destroyed.

The bank's document policy requires employees to routinely discard some documents — unless they are aware the documents are under subpoena or are the subject of a lawsuit.

Quattrone's defense attorneys contended throughout that Quattrone, in sending the e-mail, was merely encouraging his employees to follow company policy.

But prosecutors insisted Quattrone had been made aware that the grand jury and Securities and Exchange Commission were making broad inquiries into the bank that could require documents from his investment bankers.

"Frank Quattrone knew the rules," Assistant U.S. Attorney David Anders told jurors in closing arguments. "He knew without being told that when there's a subpoena, you can't destroy documents."

Originally, the defense pursued a strategy of showing that the investigations, which focused on how initial public offerings of stock were doled out, did not involve Quattrone's division of the bank.

But when Quattrone took the stand near the end of the trial, prosecutors presented e-mail evidence that showed Quattrone at least made suggestions on which CSFB clients should be considered for receiving shares.

One of those clients was Dell Computer Corp. CEO Michael Dell, who had shown interest in July 2000 in a telecommunications equipment provider called Corvis Corp. that CSFB was taking public.

But Quattrone said at trial — and his attorney, John W. Keker, insisted to jurors — that he never made any decisions about IPO distributions.

Besides that, Keker said sending brief endorsements of e-mails was part of Quattrone's management style. The e-mail in question was one of more than 200 he sent and received on Dec. 5, 2000.

"Ask yourself if that's how an otherwise blameless, crime-free pillar of the community commits a crime," Keker said. "Is that when a man goes off the rails, in circumstances like that, and decides that he's going to commit a crime?"

Keker also argued that CSFB lawyers never issued a broad suspension of the company's document policy until Dec. 7, 2000 — in part in response to the Quattrone e-mail.

Quattrone himself testified for three days, smiling and appearing genial under questioning from his own attorney but turning somewhat argumentative on cross-examination.

At one point, he recalled telling a subordinate that making jokes on e-mail was inappropriate.

"E-mail is a medium that lasts forever and can come back to bite you," Quattrone told jurors in explaining his reprimand of the subordinate. "I guess I was right about that."