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Frank Quattrone Is Either Innocent Or The Most Incompetent Criminal The World Has Even Known

In what has to be one of the more troubling travesties of modern American justice, Frank Quattrone, the former head of Credit Suisse First Boston’s (CSFB) Technology Group was convicted of obstructing justice yesterday.

A Single E-Mail
The sole piece of substantive evidence in the trial was a single e-mail. Ninety-eight percent of the e-mail was actually written by somebody else who had already sent it out to the entire Technology Group in a separate message. When Frank received the e-mail himself, he decided to hit “Reply All” and add 22 words which encouraged everyone in the group to pay attention to the first e-mail.

As a former research analyst in Technology Group, I can speak with some authority when I tell you that Frank often added such “color commentary” to e-mails as a way of reinforcing messages to the group or adding his own quick take on a matter. I can also tell you that Frank was constantly swamped in a sea of e-mail and voice-mail and seemed to need every free second he had to keep from falling permanently behind in his communications. For example, I remember taking a 45 minute taxi ride with Frank to the airport in Paris and I think he must have answered 100 e-mails and 20 voice mails in that time and still didn’t get through his backlog.

Not surprisingly, in addition to this one e-mail, there were literally hundreds of other e-mails, phone calls, and voice mails that Frank processed the same day that he sent the e-mail in question. What is surprising, is that the government decided to build an entire obstruction of justice case on this single e-mail.

The e-mail in question had to do with CSFB’s “document retention” policy. The e-mail encouraged everyone in the technology group to “clean up” their files in accordance with the policy, which in other words means destroy any files you have that you don’t need right now. Now as everyone in business knows, “document retention” policies are simply excuses for firms to destroy documents that might come back to haunt them if they were ever subpoenaed in a civil or criminal lawsuit. Despite their seemingly nefarious purpose though, these policies are not only legal, but they have been adopted and are religiously followed by just about every major company in the world.

Given this, the e-mail in question probably wouldn’t have been notable except for the fact that the government had recently launched an investigation into how investment banks, including CSFB, had allocated shares of Initial Public Offerings (IPOs). Further complicating matters was that Frank himself had been told of this investigation by CSFB’s head lawyer before he sent his own, now infamous, e-mail.

Putting two and two together, the government maintained that Frank was worried about the investigation and thus decided to send his 22 word e-mail with the intent of making doubly sure that everyone in the group destroyed any documents that might incriminate CSFB or the Technology Group. In short, Frank had criminally tried to obstruct justice.

At first blush, this line of reasoning doesn’t seem that far out. After all, Frank did know about the investigation and he would likely have a lot to lose if the government leveled a major fine against CSFB or charged it with a crime. What better way to ensure that the government probe went no-where than destroying any documents that might bolster the investigation? From the government’s perspective, it’s as if Frank sat down behind his computer and with criminal glee rubbed his hands together as he began to compose the 22 word e-mail that would foil the government’s investigation once and for all.

The World’s Most Incompetent Criminal
While such visions might make for good theater, and undoubtedly can sway the minds of impressionable jurors raised on the caricatured conspiracies that populate prime time television, they fall flat on their face when one subjects them to even the slightest tests of logic and reason and gives Frank even a modicum of intellectual credit.

This failure can be best illustrated by a simple series of questions:

1. What moron would send an e-mail to hundreds of people publicly encouraging them to obstruct justice? Frank was well aware that his e-mail was recorded (as he had mentioned in previous e-mails). He was also well aware that e-mails can be forwarded over the internet to anyone on the planet, including anyone at the SEC or the US Attorney’s office. Given this, why in the world would he make a public e-mail the centerpiece of his criminal conspiracy to obstruct justice? That would be like a bank robber taking out an ad in the paper to tell his accomplices about the location of their next heist. Why send an incriminating e-mail when he could have just walked out of his office and quietly ask one of his trusted lieutenants to get the job done? It just doesn’t make sense.

2. Why in the world would Frank “pile on” the original message? The actual “clean up your files” e-mail was drafted and sent by another person within the technology group who admitted he had no knowledge of the pending investigation and was not charged by the government. If Frank was truly intent on obstructing justice, this guy presented Frank with the perfect corporate finesse play. All he had to do was just step back and let this guy do his thing and the deed would be done with “plausible deniability” in place for everyone. Instead, Frank inexplicably decides to clearly implicate himself by amending 22 largely superfluous words to the original message and sending it out for all the world to see.

3. What kind of conspiracy to obstruct justice relies on 22 words in an e-mail to get the job done? I am a believer in the power of e-mail as much as the next guy, but it strikes me that if one were truly intent on obstructing justice, I can’t imagine that they’d entrust the success of their entire endeavor to a 22 word e-mail reply. Where are co-conspirators, the additional e-mails, phone calls or voice mails? Where’s the “deep throat” who reveals the secret emergency meetings between Frank and his top aides where they plot their strategy for foiling the government’s investigation? Where’s the secretary that tells of Frank's frantic requests to erase his e-mails and change his phone logs? If Frank truly felt that his livelihood and reputation were on the line and he therefore needed to obstruct justice, he appears to have made quite a half-assed effort at getting the job done.

The fact is, if you ask yourself these questions and you still believe that Frank Quattrone is guilty of anything more than poor timing and forgetfulness, then you must also logically conclude that Frank is one of the most incompetent criminals the world has ever known. In fact not only is he incompetent, but he’s also wildly inept at corporate politics and so lazy that all he bothers to do for his grand conspiracy is send a 22 word e-mail.

The Real Frank
The reality to anyone who knows Frank and has spent time with him is that he is anything but incompetent, inept and lazy. In fact, my guess is that if you polled all the people who have seriously interacted with him, I suspect that about 95% of them will say that Frank is one of the most competent; accomplished, and hard working people they have ever run across.

In light of Frank’s prodigious intellect and effort, the government’s case boils down to trying to make you simultaneously believe in two impossible contrasts of the same man: one the one hand, Frank is the wildly successful, Wharton-educated, Wall Street power broker at the top of his game, while on the other he is the complete idiot who risked his entire position in life on a blatantly incriminating e-mail that he didn’t need to even send in the first place.

The Real Crime
The ultimate irony of all these histrionics is that the government’s much touted IPO investigation was a complete flameout. No indictments, no trial, no pleas, no nothing. Left at the precipice with nothing to show for countless hours of work and millions of dollars of tax payer’s money, the government no doubt felt strong pressure to show something for all its efforts. So strong in fact, that they went ahead with a case that has just one substantive piece of physical evidence as its centerpiece.

It is hard to imagine that the federal prosecutors of this case, all of whom are no doubt highly distinguished and intelligent in their own rights, seriously believed in their own contorted and illogical caricature of Frank. Perhaps they saw Frank’s prosecution as necessary to justify their original investigation or perhaps they felt that Frank had committed real crimes that their original investigation could not prove and thus they were serving justice albeit in an indirect way.

Whatever the case may be, Frank’s conviction marks a sad chapter in our legal history for it shows that logic and reason are no match against innuendo and invective when the government decides that it wants to create a case. By the dictates of common sense and circumstance Frank Quattrone is an innocent man, but these days it seems as though neither the government nor the media wants to let common sense get in the way of a good story and that is the real crime.

May 4, 2004 in Wall Street | Permalink


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The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.