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A federal prosecutor told a jury Tuesday that investment banker Frank P. Quattrone knew he was obstructing investigations and tampering with witnesses when he approved and sent out e-mails implying that employees should destroy documents in December 2000. Assistant U.S. Attorney Steven R. Peikin said that Quattrone, who ran initial public offerings in technology stocks for Credit Suisse First Boston (CSFB), felt that a federal grand jury investigation and a parallel probe by securities regulators “threatened his business, threatened his reputation and threatened his livelihood.” But when it came time for Quattrone’s side to present its opening statement in the courtroom of Southern District Judge Richard Owen, defense attorney John Keker placed the blame squarely on CSFB’s legal department, saying Quattrone abided by the company’s document retention policy from beginning to end. Keker also promised that Quattrone would take the witness stand in his own defense and would show he could not have intended to obstruct the investigations into allocations of hot public offerings — and kickbacks from those allocations — because the investigations concerned a “completely different part of the bank.” A jury of six men and six women, with four alternates, will hear evidence on those competing versions of the truth as they are asked to decide whether one of the stars of the Internet boom is guilty on two counts of obstruction of justice and one count of witness tampering. The trial will turn, in part, on the workings of the CSFB’s document retention policy. The policy mandates that upon completion of an initial public offering, employees should preserve key documents in a file and destroy notes or other superfluous documents. One exception to that policy is where company employees know that subpoenas have been issued for materials. In that case, all documents must be preserved. The government’s case rests in part on the knowledge Quattrone obtained, particularly from a key member of the company’s legal department, that subpoenas had been issued to CSFB by a federal grand jury sitting in the Southern District of New York, as well by as investigators with the National Association of Securities Dealers and the Securities and Exchange Commission. On Dec. 3, 2000, Peikin said, then-CSFB General Counsel David Brodsky e-mailed Quattrone and told him they needed to discuss recent developments that are “of extreme concern.” On Dec. 4, a subordinate e-mailed Quattrone with a proposed message to be sent to employees about potential litigation over plummeting Internet stocks. The employee, Richard Char, referred to the document retention policy, saying “Today it’s administrative housekeeping — In January, it could be improper destruction of evidence.” “When Frank Quattrone got that e-mail, he had a choice,” Peikin said. “But Frank Quattrone chose another path, a path that violated the law and a path that would lead up the steps of this courthouse and into this courtroom,” he said. Quattrone, he said, responded, “You shouldn’t make jokes like that on e-mail.” For Peikin, that statement meant Quattrone was really telling Char he should “sanitize,” the e-mail, an implicit approval of Char’s message. Keker objected to the prosecutor’s statement as argumentative. Peikin moved on, saying the next day, Dec. 5, Quattrone gave a stronger endorsement of the Char e-mail, re-sending it to employees with the addition of the following note: “Having been a key witness in a securities litigation case in South Texas, I strongly recommend you follow this advice.” That e-mail, Peikin said, was sent after Quattrone had learned that The Wall Street Journal was preparing a story on the investigation and after he was told by Brodsky that he needed his own lawyer because the company could not represent him. Keker, of San Francisco’s litigation boutique Keker & Van Nest, began his opening statement with no fanfare, turning directly to the e-mails. As for the “joke” e-mail, Keker said the evidence was merely the government trying to speculate “about what’s in a man’s mind.” And the second e-mail, he said, was simply Quattrone urging employees to abide by a document retention policy that was already in place. In fact, he said, it was the job of the legal department to alert employees when subpoenas triggered suspension of the normal retention policy — and Quattrone was not told that subpoenas had been issued or that a suspension was being contemplated. “You are going to see a lot of information about subpoenas,” Keker promised the jury. “The lawyers never suspended the policy and the lawyers never told Frank Quattrone that the subpoenas” covered more than a request for documents from the part of the company that actually handled allocations of initial public offerings — the Equity department. “If he had any criminal intent here, the best thing to do was to do nothing,” said Keker, who once prosecuted Oliver North for the Iran/Contra Independent Counsel’s Office, and who also represents former Enron Chief Financial Officer Andrew Fastow in his fraud prosecution. After Peikin objected to this comment as argumentative, and the two sides met with Judge Owen for a sidebar conference, Keker picked up where he had left off, saying “The evidence will show that Frank Quattrone, when it comes to investigations and subpoenas, does what he is told — he complies and obeys scrupulously.” Peikin is a six-year veteran of the U.S. Attorney’s Office in Manhattan who has prosecuted an array of cases that include international financial fraud, murder and racketeering. He was named co-chief of Securities and Commodities Fraud Unit. The trial is expected to last two weeks.

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