Investment banker testifies

NEW YORK — Frank Quattrone’s first two days on the witness stand, testifying in his own defense last week in his federal obstruction-of-justice trial, played out in sharp contrast.

On the first day, Quattrone’s lead attorney asked questions designed to portray the former top technology banker as successful and friendly, a busy manager who had little time — much less the intent — to break the law.

On the second, prosecutors presented a series of e-mails that seemed to contradict Quattrone’s assertion that he played little or no role in how shares of hot new stocks were doled out at his bank, Credit Suisse First Boston.

The e-mails weakened a critical leg of the Quattrone defense — that his role at the bank was separate from those who allocated shares, and that he was simply following company policy when he urged employees to destroy files late in 2000.

And they set up a dramatic conclusion, probably this week, to the closely watched trial in Manhattan federal court. Quattrone returns to the stand Tuesday to face more questions from prosecutors.

The Quattrone e-mails were "a huge leg up for the government," said Robert Mintz, a former federal prosecutor now in private practice. "It really goes to the issue of intent. He had more or less denied this on direct testimony."

Legal experts said the newly revealed e-mails call into question Quattrone’s attorneys’ decision to have him testify in his own defense — a gamble in any criminal case.

"They place front-and-center before the jury their own credibility," Mintz said. "Anything that rattles that credibility significantly in front of the jury runs a serious risk of completely undermining the defense."

The case hinges on an e-mail sent by Quattrone, who headed CSFB’s technology group, to his employees on Dec. 5, 2000, urging them to "catch up on file cleanup." The e-mail had been drafted by a Quattrone subordinate a day earlier.

Prosecutors say the high-profile banker was deliberately trying to block the government’s investigation into whether CSFB gave some clients access to initial public offerings of stock in exchange for kickbacks.

Quattrone, 47, is charged with obstruction of justice and witness tampering. The charges carry up to 25 years in prison, although federal securities guidelines would likely mean a far shorter sentence.

Quattrone contends he was following a bank policy that requires employees to throw out some files unless they are aware the documents are being sought by a government subpoena or could be the subject of a lawsuit.

Legal observers say the personal impression Quattrone made on jurors on the stand Thursday and Friday — and will make as his testimony continues today — will decide the case.

On Thursday, Quattrone answered questions about CSFB’s chains of command and responsibility — questions designed to separate Quattrone from the allocation process. He frequently smiled at jurors and addressed them directly.

"That’s unusual, and most defense lawyers counsel their client against that," said George Newhouse, who prosecuted obstruction cases for the Justice Department in Los Angeles for 12 years before entering private practice. "The upside is that it establishes a personal connection. The downside is that the jury may feel manipulated."

Attorney John W. Keker also walked Quattrone through more than a dozen e-mails he sent on the same day as the document destruction note, attempting to show he was carrying out a normal day’s business.

At one point, Quattrone even made a joke, recalling thinking once before that "e-mail is a medium that lasts forever and can come back to bite you. I guess I was right about that."

But on Friday, prosecutors displayed e-mail evidence showing Quattrone had helped Dell Inc. CEO Michael Dell secure shares of a new public company at bargain prices.

"Isn’t it a fact, sir, that you did participate in the process of making IPO allocations at Credit Suisse First Boston?" Assistant U.S. Attorney Steven Peikin asked him.

"Yes," Quattrone said. But asked whether he was "quite involved" with the deals, he answered, "No."