Former whiz kid draws 18-month term
By Erin McClam
Associated Press
NEW YORK — Frank Quattrone, whose deft dealmaking made him an investment banking star during the Internet stock bubble and a millionaire many times over, was sentenced yesterday to 18 months in prison for obstructing justice.
Associated Press
The sentence makes Quattrone, 48, the most prominent Wall Street figure since junk-bond king Michael Milken to face time behind bars.
On May 3, former investment banker Frank Quattrone was convicted of obstructing a grand jury, obstructing regulators and witness tampering. The case centered on an e-mail he forwarded to bankers at Credit Suisse First Boston encouraging them to "clean up" their files. He was sentenced yesterday.
U.S. District Judge Richard Owen ordered Quattrone to begin serving the time in late October — a shorter window to get his affairs in order than even federal prosecutors had requested.
Outside court, Quattrone looked into television cameras and, with a breaking voice, thanked his friends, insisted he had been wrongly convicted and vowed to appeal.
"To my family in California, Dad's coming home soon," he said. "I'm OK, and I love you. I can hold my head high right now because I know I'm innocent."
The 18-month sentence far exceeds the recommendation of federal probation officials, who had suggested the judge give the ex-banker five months in prison and five months of house arrest.
Judge Owen said he granted a government request to beef up the sentence because Quattrone lied when he testified in his own defense at trial and claimed he never intended to obstruct justice.
The case hinged on a 22-word e-mail forwarded by Quattrone to bankers at Credit Suisse First Boston in December 2000, encouraging them to "clean up" their files. The bank was under federal investigation at the time.
The judge — who also fined Quattrone $90,000 and said he would serve two years probation after prison — rejected Quattrone's entreaty for a lighter sentence on grounds he needs to care for his chronically ill wife and his 15-year-old daughter, who the defense says is suffering from diagnosed psychological problems.
Owen even appeared to question the accuracy of a defense claim that the daughter suffers from bulimia, noting that some letters he had received described the girl as balanced and thoughtful without indications of the eating disorder. Instead, the judge bluntly noted that Quattrone was a federal convict and that serving time in prison could add to the teen's trauma.
Quattrone made $120 million in 2000, his most lucrative year at CSFB. His penchant for dealmaking made him one of the industry stars of the late-1990s Internet stock boom. His investment banking stamp was on some of Silicon Valley's flagship companies in the late 1990s — Amazon.com, Netscape Communications Corp., Cisco Systems and Intuit, among others.
Quattrone was convicted May 3 of two counts of obstruction and one count of witness tampering, all tied to the brief e-mail he sent to CSFB technology bankers.
At the time, federal investigators were looking into how the bank had allocated shares of hot initial public offerings of stock. No charges were brought in the probe, and the bank paid a $100 million civil settlement.
Quattrone claimed during two trials — the first ended in a hung jury — that he was unaware of the scope of the investigation when he sent the e-mail on Dec. 5, 2000.
A colleague had suggested that bankers "clean up" files for the holidays, and Quattrone forwarded the note with an endorsement: "I strongly advise you to follow these procedures."
He contended at trial that he was simply following CSFB policy, which called for regular destruction of some documents.
Owen, following a defense recommendation, said he would suggest that federal prison officials assign Quattrone to Lompoc, a minimum-security prison in California. Quattrone and his family live near San Francisco.
The prison sentence for Quattrone marks another win for Manhattan federal prosecutors, who in the past six months also have won convictions against Martha Stewart and two former cable TV executives from Adelphia Communications Corp.
Defense lawyers will challenge Quattrone's conviction before a federal appeals court on numerous grounds, including allegations that the judge was unfair in his application of evidence rules.
The appeals court also has the option of issuing a stay of the sentence, keeping Quattrone out of prison while he appeals. Stewart was granted a similar stay by the judge who oversaw her trial.
"We believe Frank Quattrone will never have to serve one day of the prison sentence just imposed on him," defense lawyer Mark Pomerantz told reporters outside court.
