NEW YORK — Credit Suisse First Boston lawyers took more than two weeks to order staff to preserve documents under grand jury subpoena, a key government witness conceded Tuesday in the obstruction ofjustice trial of former highflying Internet banker Frank Quattrone.
Under intense cross-examination on Day 6 of the closely watched trial, David Brodsky, CSFB’s former general council, admitted he waited until Dec. 7, 2000, to send a widespread alert to staff to retain all documents related to hot stock offerings. That came two days after Quattrone forwarded the now infamous ”time to clean up those files” e-mail and more than two weeks after CSFB first received orders from a federal grand jury to turn over the documents.
The concession by Brodsky, the prosecution’s star witness, appeared to undermine the government’s case that Quattrone obstructed justice and tampered with witnesses when he forwarded and approved an e-mail written by a subordinate. That e-mail instructed investment bankers in Quattrone’s Silicon Valley technology department to ”clean up” their files before Christmas vacation.
Defense attorney John Keker also sought to discredit Brodsky’s earlier testimony that he had called Quattrone only hours before the e-mail was sent, warning the star dealmaker that he was personally at risk from the criminal grand jury probe into whether CSFB received kickbacks from hedge funds in exchange for much-sought-after initial public offerings.
Suggesting his client did not know subpoenas had been issued for documents kept by his investment banking department, Keker repeatedly got Brodsky to acknowledge that he had said the probe involved CSFB’s allocation of IPOs, a process generally handled outside of Quattrone’s tech group.
Brodsky also told the jury that he delayed ordering staff to save subpoenaed documents in the hope he could persuade prosecutors to drop their criminal inquiry, which they later did.
”I honestly believed the U.S. Attorney’s office did not have a basis for a criminal investigation,” he said. ”The idea was to get them to back off their inquiry.”
Quattrone, 47, is likely to take the witness stand Thursday. Tuesday, he seemed pleased with his defense as he kept a careful eye on the proceedings while taking notes and nodding in agreement with Keker’s questioning.
Prosecutors are set to bring their final witness this morning. Despite defense objections in court late Tuesday, Gary Lynch, CSFB’s top lawyer, is expected to recall a January 2003 conversation in which Quattrone denied any knowledge of the grand jury investigation and other probes at the time he forwarded the offending ”clean up” e-mail. The defense argued Quattrone simply misspoke.
