Former Credit Suisse First Boston banker Frank Quattrone, convicted in May of obstructing a federal investigation of initial public stock offerings, on Monday was denied a new trial by a judge he had accused of erroneous jury instructions.
Quattrone, who claimed that U.S. District Judge Richard Owen had made errors in telling jurors how to weigh evidence from the trial in New York, is scheduled to be sentenced Sept. 8. He could receive a prison sentence of 10 to 16 months, according to federal sentencing guidelines. Quattrone's first trial on the same charge ended in October in a mistrial.
"It is an extreme rarity when a judge will grant a new trial based on a problem with a jury instruction," former federal prosecutor Jacob Frenkel said. "The reason for such a motion is to entirely preserve the issue on appeal."
Quattrone, who was the Silicon Valley's star banker, is the highest-ranking securities executive to face prison since junk-bond pioneer Michael Milken went to jail in the 1990s. Quattrone's lawyers have said they will appeal his conviction.
Frenkel said such an appeal might have more chance of success than those of other white-collar crime defendants, including homemaking entrepreneur Martha Stewart and Adelphia Communications Corp. founder John J. Rigas. The judges in those cases, Frenkel said, took great pains to appear more evenhanded in their rulings.
Owen's "perceived pro-government decisions in terms of evidence admitted for the government and excluded for the defense have created a basis for defense success on appeal," Frenkel said. "The Martha Stewart verdict is probably airtight on appeal because the judge was particularly careful in that case to ensure balanced decision making. That was also very much true in Adelphia."
Quattrone, 48, was convicted on May 3, after a two-week trial, of obstructing justice. Stewart, convicted in March on similar charges, is scheduled to be sentenced Friday in New York. Rigas was convicted last week of looting Adelphia, the cable television company he founded.
At Quattrone's trial, jurors concluded that he intended to hinder federal investigations into how CSFB doled out shares in initial public offerings when he sent out a single-sentence e-mail on Dec. 5, 2000, endorsing a subordinate's recommendation that technology bankers "clean up" their files.
Quattrone, who earned $165 million from 1998 to 2000 at CSFB, resigned from the firm last year after five years as head of the Silicon Valley technology group. CSFB is the securities unit of Credit Suisse Group, the second-largest Swiss bank.
In his motion for a new trial, Quattrone said Owen gave an "unorthodox and confusing" instruction to jurors about reasonable doubt and gave misleading instructions about the government's burden of proof.
John Keker, a San Francisco attorney for Quattrone, did not return a call seeking comment. Megan Gaffney, a spokeswoman for interim U.S. Atty. David N. Kelley in New York, declined to comment.
Keker repeatedly challenged the judge's rulings in the first trial. At one point in that trial, Owen likened Keker to "a fire hydrant on the corner of somewhere in New York City in the summer and I can't turn you off."