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The conviction of former Credit Suisse First Boston investment banker Frank Quattrone for obstructing federal investigations was attacked Tuesday for insufficient evidence and a jury charge that his attorneys claim made it easy to return a guilty verdict. Attorney Mark Pomerantz told the 2nd U.S. Circuit Court of Appeals that the standard applied by the government in pursuing Quattrone for endorsing an e-mail urging employees to “clean up those files” while a grand jury subpoena was pending was so open-ended that it resulted in an unfair conviction. It was not enough, Pomerantz said, for Quattrone to have suggested to employees that documents should be destroyed in December 2000 as part of the bank’s regular culling of initial public offering files — even if he was aware of the grand jury subpoena and a second subpoena from the Securities and Exchange Commission. U.S. Supreme Court and 2nd Circuit case law require, he said, that “you have to know that your actions will derail” a grand jury investigation. But Assistant U.S. Attorney David Anders, who helped prosecute Quattrone, said that the evidence was more than enough and the jury charge by trial judge, Southern District of New York Judge Richard Owen, was fair. Quattrone knew that his endorsement of the e-mail would result in the destruction of documents by staffers, Anders said, even though he later tried unsuccessfully at trial to claim that he was far removed from the area of inquiry covered by the subpoenas — the “process” of allocating shares in initial public offerings. Quattrone, 49, attained great wealth and celebrity status as one of the more prominent figures of the 1990s boom in technology stocks and a red-hot market for initial offerings. The SEC and, later, a federal grand jury in New York, launched wide-ranging probes into the way that investment banks, including Credit Suisse, and the companies they helped bring to market distributed shares of offerings that often skyrocketed in value on the first day of trading. The first trial of Quattrone before Judge Owen ended in a mistrial in 2003. But the prosecution prevailed the second time around; and the jury convicted Quattrone of two counts of obstruction and one count of witness tampering. Owen, finding that Quattrone lied on the witness stand, sentenced Quattrone to 18 months in prison instead of the five months of incarceration and the five months’ home confinement recommended under federal sentencing guidelines. He has been free pending appeal. In addition to their argument that the standard for obstruction as applied to Quattrone was unfair, the defense team said Owen’s jury instruction was flawed because it dealt only with whether Quattrone’s e-mail could have affected documents sought by the grand jury. Pomerantz, of Paul, Weiss, Rifkind, Wharton & Garrison, said the instruction was in error because it said nothing about Quattrone’s state of mind. A panel of 2nd Circuit Judges Richard Wesley and Peter Hall, and sitting by designation, Northern District Chief Judge Frederick J. Scullin Jr. focused on Pomerantz’s argument that a guilty verdict required a degree of specificity concerning the documents sought and actual knowledge that the actions taken would impede the grand jury — a “nexus” between the defendant’s actions, his intent, and the actual investigation. Judge Scullin questioned Anders along this line, saying the issue was “not what he knew about the investigation — the issue was what he knew about specific documents being destroyed.” Anders responded that the “knowledge of the scope of the investigation was co-extensive with knowledge of the investigation.” Judge Wesley, questioning Pomerantz, said that Quattrone knew about the grand jury subpoena for documents from in-house counsel David Brodsky, a key witness in the trial. “What more do you need?” Wesley asked. Pomerantz’s ultimate answer was “You need to know that your conduct will have an impact on what the grand jury hears.” When it was Anders’ turn, Wesley said that, if the court accepted Anders’ argument that “generalized knowledge” of the documents sought was enough “Don’t we run the risk of just writing out the knowledge element?” UNFAIR QUESTIONING? Pomerantz also took aim at Anders during oral argument for having tried to paint Quattrone as a “bad guy” when Anders asked Quattrone at trial about making a side deal to collect $2 million in fees for his bank from executives with the high-tech company Research in Motion. Quattrone sent the e-mail in the early evening hours of Dec. 5, 2000, within minutes of sending the e-mail endorsing the suggestion that employees “clean up” the files. Pomerantz said the questions on the fee arrangement were irrelevant to the case and highly prejudicial, particularly since there was no suggestion that Quattrone had violated any laws on the fees. Judge Wesley asked Anders about the line of questioning, prefacing his remarks by acknowledging that “every good trial lawyer” tries to “push the envelope.” “You really blew the side of the envelope out, didn’t you?” Wesley asked, raising the issue of whether the line of questioning was conducted in “good faith.” Anders defended himself, saying that the only reason he brought up the fee e-mail was because of its proximity to the “clean up” e-mail. And Quattrone opened the door to this inquiry, he said, because he claimed to have endorsed the “clean-up” e-mail without much thought, when he was rushing to get out of the office and get home to his family. The implication, Anders said, was that Quattrone was being far more deliberate than he claimed, whether he was dealing with a $2 million fee or weighing the impact of his words on the potential destruction of documents. The intent, he said, “was to make it clear that this wasn’t just tidying up — these were serious matters.”

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