PR Effort Ramps Up to Defend Star Banker
QUATTRONE'S TEAM WORKS ON HIS IMAGE

Frank Quattrone’s battle to clear his name has entered a new phase: the public-relations campaign.

The former star banker is under fire on many fronts. He faces charges of criminal obstruction of justice for helping to urge colleagues in an e-mail to “clean up” files that regulators say were sought in several investigations. He also faces expulsion from his industry of 23 years for allegations that he improperly offered overly optimistic stock research and hot stock offerings to win investment-banking business.

Now a team of public-relations experts hired by Quattrone, as well as several prominent Silicon Valley supporters, is starting to fight back.

His attorneys and public-relations representatives have attacked the public statements of the federal prosecutor who announced the federal charge against Quattrone. A prominent technology publisher has written that Quattrone is being offered up as a sacrifice for those really to blame for tech losses: the media and greedy investors. Other supporters have written to the Mercury News decrying “biased” coverage and describing Quattrone as an honest and charitable family man.

Experts in public relations say this is how high-stakes personal public relations is done these days. Faced with a crisis, targets of critical press coverage need to do one of two things quickly: Apologize and accept responsibility for past misdeeds, or come out swinging. Quattrone, who maintains his innocence on all charges, is clearly in the latter camp.

The pro-Frank campaign has been successful on several fronts:

Helping Quattrone’s cause is the fact that, at least in the criminal matter, he is not being charged for securities violations, but rather for allegedly trying to obstruct an investigation. That raises the question for many of whether regulators were trying to get Quattrone on something after coming up empty in their primary probe.

“There is a legitimate question of, is this a serious violation or is it trumped up?”' said Alan Bromberg, a securities-law professor at Southern Methodist University.

Still, several experts saw similarities with how another embattled financier handled his time on the legal ropes: former junk-bond king Michael Milken.

When Milken was indicted in the late 1980s on 98 counts of securities fraud and other charges, his public-relations machine portrayed him in ways that resemble the current defenses of Quattrone. Supporters asserted that Milken was being assailed for “technical” violations of law that were not clear violations at the time. They pointed to his extensive charitable activities and his unique role in raising money for corporate America.

“In a world where image is important, that becomes part of the defense,” said an attorney familiar with Milken, who notes that such points can help influence potential jurors and the public at large.

Some say such outreach may have helped Milken, despite the fact that he wound up pleading guilty to six felonies, paying $600 million in fines and spending time in prison.

Indeed, often the regulators themselves see value in making the case a public-relations event. Rudolph Giuliani, who prosecuted Milken as New York U.S. attorney (the same office now prosecuting Quattrone), rode his highly public success to the job of New York mayor.

Some said it was an interesting public-relations twist for Quattrone’s attorneys to publicize their letter asking U.S. Attorney James Comey to retract his statement that Quattrone knew regulators were seeking the documents he suggested cleaning out. His attorney contends that there is no evidence that is true.

Legal experts said the letter had little chance of actually getting a retraction. But it was a key public-relations tool.

Quattrone’s attorney wants it to look like prosecutors “overreached and messed up, so that becomes the focus on the entire discussion,” said John Jordan, president of Principor Communications and an expert in crisis public relations. “If he can demonstrate that, then he becomes the one who is being persecuted, and…he’s hoping the flow of sympathy goes from, possibly, the investors who lost money to him.”

Of course, there appears to be a genuine wellspring of support for the former banker in Silicon Valley, with many still convinced that Quattrone is a finance genius.

At worst, some say, Quattrone made a bad judgment call in sending out his “clean up” e-mail, but it seems hard to fathom that he was trying to orchestrate an Arthur Andersen-like coverup.

“This is not a guy who is out to defraud people or do anything substantially different than the practices of other people in his profession,” said Steve Kirsch, founder of software company Propel, who knows Quattrone as an investor in Kirsch's company and a co-member of the Tech Museum board.

Others said Quattrone's good fortune – he made $200 million over 3 1/2 years – made him a target. He was “the smartest and most successful investment banker of the last 20 years, and people get very jealous of very successful people,” said William “Boots” Del Biaggio, a prominent start-up financier in Silicon Valley.

Ultimately, experts note that the public-relations battle is just a sideshow; the criminal trial and regulatory hearings will decide Quattrone's fate. “PR can influence that,” said Jordan. “But ultimately, it can’t overcome it.”

Contact Deborah Lohse at dlohse@mercurynews.com or (408) 271-3672.

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