The glorious appeals system for the rich - Providence Journal

Lee Drutman: The glorious appeals system for the rich

01:00 AM EDT on Friday, April 7, 2006

THERE IS a wonderful moment in the recently released film Thank You for Smoking in which Nick Naylor, the tobacco-lobbyist protagonist, tackles a question from his son on what makes America the greatest country. Without missing a beat, Naylor replies: "Our endless appeals system."

Another individual who must be feeling pretty good about our endless appeals system is Frank Quattrone, the former Crédit Suisse First Boston technology banker. Quattrone recently learned that if you're willing to spend countless millions on high-priced lawyers and keep fighting (never give up the faith!), sometimes you can get a federal appeals court to take seriously your contention that the previous judge was biased against you and win a third trial.

Quattrone, of course, has always thought big. During the technology bubble, he didn't let himself get bogged down by silly things like price-to-earnings ratios or common sense. No, he was out there handling a record 138 high-tech initial public offerings between 1998 and 2000 (almost as many as the next two competitors combined) and cheerleading a brave new future, in which instead of a sucker born every minute, a sucker would be born every second.

Where others might have had ethical qualms about giving top tech executives hot new share offerings in order to secure their investment-banking business, Quattrone was establishing his "Friends of Frank" program, charting a brave new course in back-scratching cronyism.

Where most top managing directors in investment banking were content to make off with $8 million, maybe $10 million, during the tech bubble, Quattrone sequestered a cool $200 million. And where others might have felt they needed to be extra careful two days after learning about a federal grand-jury investigation, Quattrone boldly sent out an e-mail to his staff telling them to "clean up those files."

It was this fateful e-mail that, almost two years ago, led a jury to convict Quattrone on obstruction-of-justice charges. U.S. District Judge Richard Owen then sentenced Quattrone to 18 months in prison -- which was actually far less than the 25-year maximum he could have faced, and also much less than the 55 months the average convicted burglar spends in prison.

But unlike your run-of-the-mill burglar, big-thinking Frank Quattrone had a few hundred million dollars to use on his defense. And so, immediately after his trial, his lawyers were out there asserting that their client hadn't gotten a fair trial, that the judge had had it in for Quattrone from the start, and that the judge had improperly instructed the jurors, so that they would convict the banker.

Now, almost two years after his conviction (and more than four years since he sent his e-mail), a federal appeals court has agreed that, yes, "jury instructions were erroneous," and, yes, "the interest and appearance of justice are better served by reassignment."

Dreams, it seems, do come true.

It is unclear what will happen next. The federal prosecutors who had brought the case have since gone into private practice. But the Justice Department has already spent thousands of hours and millions of dollars on pursuing the trial, so it seems a shame to give up now.

Still, whatever the Justice Department does, the case ought to highlight just how hard it can be to get a conviction -- even for a lousy 18-month obstruction-of-justice charge -- when you've got a fighting white-collar defendant determined to use every last million to clear his name.

Quattrone's well-funded feistiness is hardly unique. Former WorldCom CEO Bernard Ebbers is appealing his 25-year sentence with all he's got. And former Enron CEO Jeffrey Skilling (now on trial) reportedly spent $23 million on his defense -- roughly 1 percent of the budget of the entire Justice Department -- before his assets were frozen. No doubt, even if Skilling and Enron founder Kenneth Lay (also on trial) are convicted, they, too, will keep asking for justice to be "better served" for as long as they possibly can.

If so, they, like Quattrone, will also be taking full advantage of that wonderful "endless appeals system" that makes America so great -- especially if you have the resources to properly exploit it.

Lee Drutman, a frequent contributor, is the co-author of The People's Business: Controlling Corporations and Restoring Democracy.

http://www.projo.com/opinion/contributors/content/projo_20060407_07drut.e3f0814.html