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Quattrone gets 18 months in prison
Former star tech banker also gets two years probation for obstructing justice and witness tampering.
September 8, 2004: 7:42 PM EDT
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - Frank Quattrone, the most prominent investment banker of the 1990s tech boom, was sentenced Wednesday to 18 months in prison and two years probation for obstructing justice and witness tampering.

Frank Quattrone, who got 18 months and 2 years for obstructing justice.

Quattrone was also fined $90,000. The New York federal judge who sentenced him also rejected his request to stay out of jail pending the outcome of his appeal.

Quattrone, the ex-head of Credit Suisse First Boston's tech banking business, helped take, Netscape Communications and other companies public. He was convicted in May on charges of trying to hinder a government investigation into whether CSFB doled out shares of hot IPOs to favored clients in exchange for inflated commissions.

Quattrone, 48, is one of several corporate executives to have reached the pinnacle only to be brought down by scandal in the months and years after Enron Corp. collapsed. While the specific charges vary, the former chiefs of Enron, Tyco International, WorldCom (now MCI), Adelphia Communications and HealthSouth have all been accused of playing fast and loose with the law.

Some of them have already gone to trial and others are awaiting their day in court. Few have been sentenced or are behind bars.

The exceptions include former ImClone Systems chief Sam Waksal, who celebrated his 57th birthday Wednesday in prison after pleading guilty to insider trading, and Jamie Olis, a former Dynegy executive who began serving a 24-plus year sentence this spring.

Unlike some court-bound executives, the charges brought against Quattrone were relatively benign. Prosecutors accused him of trying to block investigations by regulators and a grand jury when he forwarded an e-mail in late 2000 urging colleagues to "clean-up" their files.

Quattrone denied any deception, insisting instead that he was merely complying with the bank's document retention policy and was unaware that the government probes included his banking group. At trial, prosecutors and defense lawyers argued about the role Quattrone and his team had played in CSFB's decisions to allocate shares in hot initial public offerings.

Quattrone's first trial ended in a hung jury in October 2003 after jurors deadlocked on the charges. Quattrone was tried a second time earlier this year. He is appealing his conviction.

Read the charges (PDF)
U.S. versus Quattrone
NASD's rulings against Quattrone

CSFB, without admitting or denying wrongdoing, had paid $100 million to settle an earlier unrelated investigation into how it allocated IPOs.

Before his sentencing Quattrone asked for leniency, imploring U.S. District Judge Richard Owen to take more than 500 letters sent on Quattrone's behalf into consideration when issuing his sentence.

Orin Snyder, a former federal prosecutor now in private practice, said the sentence was harsh even though federal sentencing guidelines called for one to two years.

"It's a substantial sentence," said Snyder, adding Judge Owen is known to be tough on convicted criminals and most likely ignored the pleas for leniency from Quattrone's supporters.

Snyder also said the sentence reflected the current crackdown on corporate corruption. Quattrone, he said, would likely have faced just probation pre-Enron.

"People go to jail now for what used to be considered a lesser crime," said Snyder, a partner in Manatt, Phelps & Phillips in New York. "Eighteen months is more time than some violent criminals get in state prison."

With time off for good behavior, Quattrone could end up spending just over 15 months behind bars.

Corporate Scandal
Frank Quattrone
Corporate Finance
Credit Suisse Group

In a statement released after Wednesday's hearing, Quattrone's lawyer called his client's conviction "deeply flawed" and blasted judge Owen for refusing the allow "critical evidence" pointing to his innocence while giving prosecutors "free rein" to use what he called irrelevant evidence to sway the jury.

Among other things, prosecutors revealed in court that Quattrone earned $120 million in 2000.

"So we have a very, very strong appeal," defense lawyer Mark Pomerantz said in a statement, calling Quattrone "an innocent man unjustly convicted."

Quattrone's fate stands in stark contrast to another fallen titan who was recently sentenced for a similar offense.

Martha Stewart, the lifestyle doyenne and founder of Martha Stewart Living Omnimedia (MSO: down $0.04 to $11.06, Research, Estimates), was found guilty earlier this year of obstructing justice during an insider trading probe tied to the same scandal that brought down her friend, Sam Waksal of ImClone Systems.

Stewart, 63, received in July the lightest sentence possible under sentencing rules: five months in prison and five months of home detention. A former Merrill Lynch broker who faced similar charges and was convicted along with Stewart, Peter Bacanovic, was given the same, relatively-light sentence.

Both Stewart and Bacanovic are appealing their convictions. Their trial judge, U.S. District Judge Miriam Goldman Cedarbaum, ruled that they, unlike Quattrone, can stay out of prison until their appeals are decided.  Top of page

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