Opinion ID: 793659
Heading Depth: 3
Heading Rank: 2

Heading: Sufficiency of the Evidence Underlying Quattrone's Conviction

Text: 51 On appeal, Quattrone presses that the evidence was insufficient on each count because the government failed to establish that he knew that Tech Group files were covered by the grand jury or SEC subpoenas. Quattrone also contends that the evidence failed to prove that Quattrone sent the Endorsement Email with the corrupt intent required by each of the statutes relevant to the indictment. The government counters that the evidence amply demonstrated that Quattrone, as head of the Tech Group and someone often involved in IPO allocation decisions, was aware that the SEC and grand jury investigations called for documents held by Tech Group bankers. Further, the government argues that the circumstances surrounding the Endorsement Email, coupled with the threat Quattrone perceived from the investigations and his subsequent false statement to Lynch, make reasonable the inference that Quattrone acted with the necessary corrupt intent when he sent the Endorsement Email. Because we think a rational trier of fact could credit the inferences that the government urges, the evidence is sufficient to support Quattrone's conviction on each count. 18 52
53
54 In order to convict for obstruction of justice under the omnibus clause of section 1503, the government must establish (1) that there is a pending judicial or grand jury proceeding constituting the administration of justice, (2) that the defendant knew or had notice of the proceeding, and (3) that the defendant acted with the wrongful intent or improper purpose to influence the judicial or grand jury proceeding, whether or not the defendant is successful in doing so — that is, that the defendant corruptly intended to impede the administration of that judicial proceeding. United States v. Fassnacht, 332 F.3d 440, 447 (7th Cir.2003) (citing United States v. Maloney, 71 F.3d 645, 656 (7th Cir.1995)); see also United States v. Aguilar, 515 U.S. 593, 599, 115 S.Ct. 2357, 132 L.Ed.2d 520 (1995). 55 In Aguilar, the Supreme Court charted the metes and bounds of the omnibus clause, expressly embossing a nexus limitation on the statute. See Aguilar, 515 U.S. at 599-600, 115 S.Ct. 2357. The nexus limitation is best understood as an articulation of the proof of wrongful intent that will satisfy the mens rea requirement of corruptly obstructing or endeavoring to obstruct. As used in the statute, the word corruptly is normally associated with wrongful, immoral, depraved, or evil. Arthur Andersen LLP v. United States, 544 U.S. 696, 125 S.Ct. 2129, 2136, 161 L.Ed.2d 1008 (2005). In Aguilar, the Court noted that to prove the accused was corruptly endeavoring to influence, obstruct or impede a grand jury investigation, the government had to prove a connection between the defendant's intentional acts and the likelihood of potentially affecting the administration of justice: 56 The action taken by the accused must be with an intent to influence judicial or grand jury proceedings; it is not enough that there be an intent to influence some ancillary proceeding, such as an investigation independent of the court's or grand jury's authority. United States v. Brown, 688 F.2d 596, 598 (C.A.9 1982) (citing cases). Some courts have phrased this showing as a nexus requirement — that the act must have a relationship in time, causation, or logic with the judicial proceedings. United States v. Wood, 6 F.3d 692, 696 (C.A.10 1993); United States v. Walasek, 527 F.2d 676, 679, and n. 12 (C.A.3 1975). 57 In other words, the endeavor must have the 'natural and probable effect' of interfering with the due administration of justice. Wood, supra, at 695; . . . This is not to say that the defendant's actions need be successful; an endeavor suffices. . . . But as in Pettibone [ v. United States, 148 U.S. 197, 13 S.Ct. 542, 37 L.Ed. 419 (1893)], if the defendant lacks knowledge that his actions are likely to affect the judicial proceeding, he lacks the requisite intent to obstruct. 58 Aguilar, 515 U.S. at 599, 115 S.Ct. 2357. 59 Applying this standard, the Court struck down the obstruction of justice conviction of a United States District Court judge who provided false statements to an investigating agent where the agent had not been subpoenaed or otherwise directed to appear before the grand jury. Id. at 601, 115 S.Ct. 2357. The Court vacated the conviction because the false statements could not be said to have the `natural and probable effect' of interfering with the due administration of justice. Id. The Court came to this conclusion even though the lied-to agent had represented to Aguilar that, in substance, the grand jury might hear evidence related to Aguilar's attempt to thwart its investigation. See id. at 595-97, 600, 115 S.Ct. 2357; see also Arthur Andersen LLP, 125 S.Ct. at 2136-37 (discussing Aguilar ). 60 The touchstone for the nexus requirement, therefore, is an act taken that would have the natural and probable effect of interfering with a judicial or grand jury proceeding that constitutes the administration of justice; that is, the act must have a relationship in time, causation, or logic with the judicial proceedings. Aguilar, 515 U.S. at 599, 115 S.Ct. 2357. In the context of a grand jury subpoena, this rule limits criminal liability to cases where the defendant has notice that his wrongful conduct will affect the administration of justice, because false information will be provided to a grand jury or otherwise pertinent information known to be called for by a grand jury may be placed beyond its reach. Cf. id. A defendant's awareness that a subpoena seeks documents, coupled with his actions taken to place those documents beyond the grand jury's reach clearly would meet the hemming function of the nexus requirement. The defendant need not read the grand jury subpoena or know its precise contents; it is enough if he knows that a subpoena calls for a category of documents, or even one particular document, and then takes steps to place those documents beyond the reach of the grand jury. 19 61
62
63 There was sufficient evidence from which a trier of fact could conclude that the government established the nexus element of Count 1. A rational trier of fact could conclude beyond a reasonable doubt that Quattrone knew that his conduct would obstruct the grand jury's investigation because there was a logical relationship between his knowing conduct — sending the Endorsement Email while aware of the grand jury subpoena's call for documents relating to the IPO allocation process that were in the possession of Tech Group bankers — and the effect it was likely to have — destruction of documents that otherwise would have been produced. The evidence clearly indicates Quattrone knew of the parallel investigations of CSFB's IPO allocation practices and that the Tech Group was involved in allocation decisions. Combined with the threat that the investigations posed to Quattrone, the jury could infer that Quattrone was aware that his conduct was likely to affect the grand jury investigation. 64 A series of emails established that Quattrone knew that the SEC and NASD had begun informal investigations into CSFB's allocation practice and that the SEC investigation had escalated by the Fall of 2000. In June 2000, Quattrone learned that the NASD had begun an inquiry into the VA Linux IPO, underwritten by bankers in the Tech Group. J.A. 640-43 (Gov.Exs. 100-03). The investigation focused only on VA Linux; Quattrone produced documents responsive to that inquiry. See id. Soon thereafter, on July 10, 2000, Quattrone learned that the SEC would be conducting an examination of CSFB's Equity and Underwriting [p]rocess beginning Friday July 14, 2000. J.A. 645 (Gov.Ex. 201). The inquiry was expected to last 4-6 weeks. See Id. The email from LCD informing Quattrone of the SEC investigation noted that the SEC ha[s] asked [CSFB] to produce . . . documents related to the equity underwriting process, including, but not limited to, the engagement of the [IPO issuing] client, the pricing of the issue, and the allocation process. Id. 65 Two months later, on September 20, 2000, Quattrone, along with other senior CSFB executives, learned from the head of LCD, Radest, that the SEC's investigation of [CSFB's] IPO allocation process has been referred to the SEC's Division of Enforcement. J.A. 648 (Gov.Ex. 400). Thus, Quattrone was aware that the investigation into CSFB was escalating and knew that it focused on IPO allocation practices. Quattrone forwarded the email to Brodsky — CSFB's chief lawyer in America and also a recipient of the Radest email — and inquired whether Quattrone could pass the email on to John Schmidt, the head of Tech PCS. J.A. 649 (Gov.Ex. 401). Brodsky replied, instructing Quattrone not to pass on the email as it was likely that Quattrone and Schmidt would be called before the SEC. Id. 66 Additional evidence from the days leading up to the Endorsement Email buttressed the inference that Quattrone was aware that encouraging the destruction of Tech Group documents would affect the grand jury investigation. First, Quattrone learned of the grand jury subpoena — and that it called for documents related to the IPO process — via a series of emails with Brodsky on Sunday, December 3, 2000. Alerting Quattrone to developments of extreme concern, J.A. 721 (Gov.Ex. 603), Brodsky informed Quattrone that we have received Federal Grand Jury subpoenas asking for testimony and documents about the IPO allocation process from the firm and each of the nine people who has so far testified before the NASDR. I have retained Bob Fiske to represent us in this criminal investigation . . . . J.A. 723 (Gov. Ex. 605). Six minutes later, Quattrone responded, asking whether the regulators [are] accusing us of criminal activity? J.A. 724 (Gov.Ex. 606). One minute later, Quattrone further replied, Who are the nine people? J.A. 726 (Gov.Ex. 607). Brodsky replied six minutes later, and again two minutes later, emphasizing the seriousness of the grand jury subpoena. J.A. 728-30 (Gov.Exs.608-09). At this point, it would be reasonable for a rational juror to conclude that Quattrone was aware that the grand jury sought documents that were in the possession of the Tech Group, given Quattrone's participation in the allocation process. 20 See supra note 8. 67 Second, on December 5, 2000, — only hours before the Endorsement Email was sent — Brodsky called Quattrone and discussed (1) the threat of a leak regarding the grand jury investigation to the Wall Street Journal; and (2) the prospect that Quattrone was likely to be called as a witness in the SEC and grand jury investigations. J.A. 273 (Tr. 1296-97). Quattrone then sent the Endorsement Email at 6:28 p.m. to all bankers in the Tech Group. J.A. 796. 68 The evidence supports the inference that Quattrone was aware that the grand jury subpoena to CSFB called for documents covered by his email — Tech Group documents related to the IPO allocation process. Trial Testimony supported the conclusion that the Tech Group created documents relating to the IPO process, including documents related to allocation of IPO shares to investors. E.g., J.A. 103, 239-40 (Tr. 634-35, 1166-72). The jury could rationally infer that Quattrone, as head of the Tech Group, was aware of the type of documents created by the Group. Having seen Brodsky's December 3 emails and Quattrone's responses, the jury could conclude that Quattrone knew that the grand jury subpoena required documents related to the allocation process. At this critical juncture, Quattrone knew that his actions [were] likely to affect the judicial proceeding. Aguilar, 515 U.S. at 599, 115 S.Ct. 2357. Accordingly, the evidence was sufficient to establish the nexus element of section 1503. 69
70 There was also sufficient evidence from which the jury could conclude beyond a reasonable doubt that when he sent his Endorsement Email, Quattrone acted with corrupt intent, i.e. the wrongful or immoral intent to obstruct the grand jury's administration of justice. See id. at 599, 115 S.Ct. 2357. Quattrone contends the evidence failed to establish an improper motive. He asserts that the Endorsement Email was innocent on its face and that the circumstances that the government relied on to establish his intent are merely equivocal facts as consistent with innocence as with guilt. E.g., Reply Br. 16-17. The government responds that the circumstances surrounding the Endorsement Email established that Quattrone sent the email with the wrongful intent to obstruct, that Quattrone's innocent explanation for sending the email was rejected by the jury, and that Quattrone's subsequent false statement to Lynch supports the inference that Quattrone corruptly intended to obstruct when he sent that email. Appellee Br. 42-45. 71 The events leading to the Endorsement Email coupled with Quattrone's false statement to Lynch provided sufficient evidence to sustain the jury verdict. Quattrone's awareness of the subpoena's reach to Tech Group documents and the rapid escalation of the investigation between the time that Quattrone began drafting and sent the Endorsement Email, coupled with the subsequent false statement to Lynch, created a realm of permissible inferences; among them, it would be reasonable for a jury to conclude that Quattrone acted with the improper intent to obstruct the grand jury investigation. 72 As we have just noted, on December 3, 2000, Brodsky informed Quattrone, in no uncertain terms, of the potential threat of the grand jury investigation into the IPO allocation process as an extension of the NASD and SEC investigations. See J.A. 721-23 (Gov.Exs.603-05). Brodsky noted that there was a danger of a leak of the investigation, which would be extremely detrimental. J.A. 730 (Gov.Ex. 605). Brodsky wrote [t]his is serious and unless I can slow it down and curtail what they do, it will spread to others in the firm. Gov. Ex. 609. The jury could have reasonably concluded that Brodsky's December 3 emails alarmed Quattrone. From this evidence, the jury could conclude that Quattrone had a motive to prevent any detriment to the bank in order to protect his status and his income. 73 Evidence also established Quattrone's opportunity to obstruct and acts aimed at that end. On December 4, 2000, Quattrone received the Char Email, began to respond, but then stopped. J.A. 734 (Gov. Ex. 615B). The next day, before sending his Endorsement Email, Quattrone learned from Brodsky about the potentially damning leak of the investigations and the ominous threat that Quattrone might now be a target. See J.A. 273. Quattrone then sent his Endorsement Email that evening, promoting the Char Email while employing an exculpatory reason for endorsing the destruction of subpoenaed documents. J.A. 796. The proximity in time between additional negative information from Brodsky and the Endorsement Email, along with Quattrone's awareness that the subpoena called for documents Quattrone knew to be in possession of the Tech Group bankers, provided legally sufficient evidence from which a jury could conclude that Quattrone acted with corrupt intent to obstruct by seeking the destruction of relevant documents. 74 In addition, the subsequent false statement to Lynch provided additional circumstantial evidence of Quattrone's guilt. Although the evidence of the misstatement might lead to alternative inferences of either deceit or innocent mistake, the jury was in the unique position to observe Quattrone's testimony and to weigh the corroborating evidence of Quattrone's corrupt intent. The jury could reasonably rely in part on the misstatement to conclude that Quattrone acted with the intent to obstruct. 75 2. Sufficiency of the Evidence Relating to the Section 1505 Charge for Obstructing Proceedings Before Agencies of the United States 76 (a) Legal Elements 77 To prove obstruction of an agency proceeding, the government must establish that (1) there was a proceeding pending before a department or agency of the United States; (2) the defendant knew of or [believed] . . . that the proceeding was pending; and (3) the defendant corruptly endeavored to influence, obstruct, or impede the due and proper administration of the law under which the proceeding was pending. United States v. Sprecher, 783 F.Supp. 133, 163 (S.D.N.Y.1992) (citing SAND, ET AL., 1A MODERN FEDERAL JURY INSTRUCTIONS: CRIMINAL ¶ 46.02 (instruction 46-9)). The latter element requires a wrongful intent or improper motive to interfere with an agency proceeding, including the judicially grafted nexus requirement. Cf. Aguilar, 515 U.S. at 599, 115 S.Ct. 2357. 78 (b) The Evidence was Sufficient to Support Conviction for Violation of Section 1505 79 The evidence clearly established a connection between Quattrone's acts of obstruction and the SEC proceeding as well as his corrupt intent. 21 As noted above, the grand jury investigation and the SEC inquiry were for the most part simultaneous. Evidence of one was often interwoven with evidence of the other. Thus, just as the evidence of obstruction of justice was legally sufficient to support a conviction, that evidence was equally sufficient to show that Quattrone acted with the wrongful intent to obstruct the SEC's investigation by calling for the destruction of documents known to have been within the scope of its investigation of IPO allocation practices. 80 We think it clear that there was sufficient evidence from which the jury could conclude that Tech Group bankers would possess some documents sought by the SEC related to IPO allocations. While the question of the degree to which the Tech Group generally, and Quattrone specifically, became involved in making IPO allocations was disputed, evidence at trial indicated that Quattrone was involved in IPO allocation decisions. See, e.g., J.A. 444 (Tr. 1977). 81 The jury could fairly conclude that Quattrone was aware that the investigation into the allocation process reached the conduct of the Tech Group. When Quattrone received emails from LCD regarding Tech Group IPOs for which document-retention notices had been issued — Selectica, Inc. and VA Linux — the emails made clear that LCD was contacting Quattrone in connection with the SEC investigation into IPO allocations to determine his involvement with allocations, valuation, or pricing of the issues. J.A. 685 (Gov.Ex. 504); see also J.A. 686-92 (Gov.Exs.505-11). Furthermore, when Brodsky contacted Quattrone regarding the grand jury investigation, he made it clear that that inquiry was an outgrowth of the SEC and NASD investigations into our allocation processes in the IPO market. See J.A. 721-23 (Gov. Exs.603-05). In addition, after Quattrone learned from the head of LCD that the investigation into IPO allocations by the SEC had been referred to the Division of Enforcement, Quattrone asked Brodsky if he could forward the email to the head of the Tech PCS group. See J.A. 649 (Gov. Ex. 401). Given this evidence, the jury was free to reject to Quattrone's explanation that he thought the investigation focused on a separate business area of the bank. 82 3. Sufficiency of the Section 1512(b)(2) Conviction for Witness Tampering 83 In order to prove a violation of 18 U.S.C. § 1512(b)(2)(A-B), charged in Count 3, the government must establish that the defendant knowingly . . . corruptly persuade[d] or attempt[ed] to persuade another with the intent to cause that person to withhold records or testimony from an official proceeding or to alter, destroy, mutilate, or conceal an object with intent to impair the object's integrity or availability for use in an official proceeding. Contrary to earlier circuit precedent, see, e.g., United States v. Gabriel, 125 F.3d 89, 102-05 (2d Cir.1997), the Supreme Court's recent decision in Arthur Andersen makes clear that Aguilar 's nexus requirement applies to some degree to section 1512(b), 125 S.Ct. at 2136-2137. 22 Accordingly, we assume for the purposes of this case only that the evidence that was sufficient to establish the nexus element for the section 1503 charge applies with equal force to establishing that element of the witness tampering charge alleged in Count 3. See supra note 18. We do note, however, that section 1512(b) requires proof of a mental state that is knowingly . . . corrupt[] with respect to the action taken. See Arthur Andersen, 125 S.Ct. at 2135-36. The Supreme Court has made clear that the conduct to be punished, then, must not only be made with wrongful intent but also with a conscious[ness] that the conduct in question is wrongful. See id. at 2136. 84 The practical effect the conscious-wrongdoing standard of section 1512(b) has upon the construction of the nexus requirement as a result of Arthur Andersen is not before us. Quattrone does not argue that the distinction makes a difference. Instead he relies on the same set of arguments raised with respect to the section 1503 and 1505 claims — that he did not act with corrupt intent. Appellant Br. 34-35. Accordingly, we rest our analysis of Quattrone's corrupt intent on that set forth in the discussion of the evidence underlying the section 1503 and 1505 convictions. The evidence with regard to Count 3 was clearly sufficient. 85