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Frank Quattrone was sophisticated enough to know that his endorsement of a e-mail instructing employees to clean out their files was an order to destroy documents and a clear obstruction of justice, a federal prosecutor said Tuesday. In his closing argument Tuesday, Assistant U.S. Attorney David B. Anders said Quattrone’s claim of innocence was contradicted by abundant evidence the star investment banker knew a federal grand jury and the Securities and Exchange Commission were closing in on his Global Technology Group at Credit Suisse First Boston when he strongly suggested that people in the group follow the bank’s document retention policy. “Please don’t be misled,” Anders said. “Although this is a serious case and an important case, it is not a close case. Frank Quattrone was caught red-handed. There is overwhelming evidence that Frank Quattrone knew exactly what he was doing when he encouraged employees to clean out their files.” But defense attorney John Keker told the jury in his concluding argument that this “otherwise blameless, crime-free pillar of the community” was doing nothing more than urging employees to follow the retention policy. The policy allows investment bankers and other employees to destroy notes and other non-essential documents once an initial public offering has been completed, unless the bank has been served with a subpoena in a civil or criminal case. And while Quattrone had been told two days before he sent the offending e-mail on Dec. 5, 2000, that Credit Suisse had received a federal grand jury subpoena, Keker said, lawyers at the bank never moved to suspend or freeze the policy. Adopting the exaggerated voice of a stage villain, Keker mocked the government’s attempt to impute “nasty criminal intent” to Quattrone. The prosecution’s case, he added later, was built on “speculation and conjecture.” But Anders used sarcasm effectively in attacking Quattrone’s argument that the subject of the government’s investigation — possible corruption in the allocation of IPO shares and commissions charged by the bank — barely concerned the investment banker because IPO allocations were the responsibility of other divisions in the bank. “He made it sound that he was as involved in the process of allocating shares in IPOs as he was in the business of ordering supplies,” Anders said. Anders also ridiculed as semantic dissembling Quattrone’s distinction between being part of overall IPO process and actually making the “decision” on who received shares of hot tech stocks. Quattrone’s admission, under cross-examination by prosecutor Steven Peikin, that he played a role in IPO allocations was one of the more dramatic moments of the trial that has proceeded before Southern District of New York Judge Richard Owen for the last two weeks. The government presented evidence of communications Quattrone had concerning IPO allocations for three stocks, including an acknowledgment of interest in one stock by Dell Computer Chairman Michael Dell. Anders said the Quattrone defense shifted positions during the trial, first claiming that he had no role in the allocation process, and then, when confronted with harmful evidence, claiming that he had nothing to do with actual “decisions” on allocations. When it came time to question his client on redirect, Keker, of San Francisco’s Keker & Van Nest, elicited that the three stocks at issue were a small portion of the more than 100 initial offerings handled by the Tech Group since Quattrone joined the bank in 1998. And on re-cross, when Quattrone was asked whether he had participated in allocation discussions on other stocks, he told Peikin, “I’m sure if I did, you would have found them.” Keker hammered on that point again in his closing argument, which is expected to continue this morning. Keker also returned to the late afternoon of Dec. 5, when Quattrone endorsed the e-mail on document destruction sent to him by subordinate Richard Char, who said file-cleaning at the moment would be administrative housekeeping, but in January, might be considered illegal destruction of evidence. The defense lawyer retraced, minute by minute, all the e-mails sent by Quattrone before he left the office for the day. Surrounding the e-mail at issue, he emphasized, were a host of other business messages, jokes with colleagues, a message to a lawyer handling a personal real estate matter and a number of other innocuous messages. “Is that when a man goes off the rails, in circumstances like that and decides that he’s going to commit a crime?” he asked. And five minutes after Quattrone’s last e-mail, Keker said, Richard Char sent an “oops” e-mail, informing Quattrone and others that the legal department was about to order a freeze on the retention policy. “Mr. Quattrone was the victim of a multi-car train wreck or a multi-car collision on the information superhighway,” he said, and it was not until Dec. 7, two days later, that the in-house lawyers actually sent out “broad document retention” notices. Once Keker’s closing argument is finished this morning, the government is expected to offer a rebuttal, then Owen will instruct the jury on how to proceed on two counts of obstruction of justice and a single count of witness tampering.

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