Quattrone wins new trial as conviction thrown out
NEW YORK, Mar 21 (Reuters) A US federal appeals court today threw out the 2004 obstruction and witness tampering conviction of former star investment banker Frank Quattrone and granted him a new trial.
Citing erroneous jury instructions by US District Judge Richard Owen, a unanimous three-judge panel of the US Second Circuit Court of Appeals in New York directed that the case be reassigned to a new district judge in the interest of justice.
Owen had sentenced Quattrone to 18 months in prison after a Manhattan jury in May 2004 found the former Credit Suisse Group Inc banker guilty of two counts of obstruction of justice and one count of witness tampering. Quattrone's lawyers argued that the trial was rife with errors.
''Essentially, the court of appeals said that Judge Owen, while a good judge, has made up his mind and can no longer be impartial,'' said George Newhouse, a white collar criminal defense specialist at Thelen Reid&Priest LLP in Los Angeles.
The jury concluded that Quattrone, 50, tried to block regulatory and grand jury probes into how his bank allocated shares of hot initial public offerings in the late 1990s, when he told Credit Suisse colleagues in a Dec. 2000 e-mail it was ''time to clean up those files.'' Another jury had deadlocked in 2003 on the same charges.
''With the wave of public opinion crying out for conviction, a judge has to be careful not to be carried away with it,'' said Roy Smith, a professor at New York University's business school and former partner at Goldman Sachs&Co. ''My guess is it may be harder to bring about a conviction after this ruling.'' It was not immediately clear whether the government will try Quattrone a third time. Megan Gaffney, a spokeswoman for US Attorney Michael Garcia, said: ''We are reviewing the opinion and considering our options.'' Representatives of Quattrone and Credit Suisse were not immediately available for comment. Quattrone has been free pending the outcome of his appeal.
ERRORS In his 61-page opinion for the appeals court, U.S. Circuit Judge Richard Wesley called Owen a ''dedicated jurist,'' and said a ''rational trier of fact'' could conclude that Quattrone deserved to be convicted.
Wesley wrote, though, that while there was no evidence to seriously doubt Owen's impartiality, ''portions of the transcript raise the concern that certain comments could be viewed as rising beyond mere impatience or annoyance.'' The appeals court concluded that Owen erred in allowing the jury to convict Quattrone of obstruction ''regardless of whether he intended such.'' It also said the judge erred telling the jury it need not find a ''nexus'' between Quattrone's actions and the pending investigations, Wesley added.
Newhouse said: ''At most, there was circumstantial evidence on the all important issue of corrupt intent. The government will need to take a hard look at whether to retry this.'' When he was convicted, Quattrone had been the most powerful securities industry executive to face jail time since junk bond king Michael Milken in the early 1990s.
After growing up in South Philadelphia, Quattrone became a star banker at Morgan Stanley, helping take such companies as Cisco Systems Inc. and Netscape Communications Inc. public.
Later, at Credit Suisse, he took home 120 million dollars in compensation one year by taking companies such as VA Linux Systems Inc public.
Quattrone was also reportedly instrumental in dishing out shares in hot initial public offerings to top executives known as ''Friends of Frank.'' REUTERS VJ RAI0459