Former Deal-Maker Is Found Guilty of ObstructionTHE NEW YORK TIMES -- NEW YORK
Frank P. Quattrone, the investment banker whose deal-making helped fuel the 1990s technology boom, was found guilty Monday of trying to impede government investigations into how hot stock offerings were doled out to investors, making him the most prominent Wall Street figure to face prison since Michael R. Milken.
The verdict came in a retrial of Quattrone after his first trial ended in a hung jury last fall. This time, however, the jurors quickly concluded that Quattrone had tried to hamper criminal and regulatory investigations when he endorsed a colleague’s e-mail message in December 2000 urging his staff of bankers at Credit Suisse First Boston to “clean up those files.”
Quattrone, who visibly gulped as the judge read the verdict aloud, was perhaps the most prominent investment banker in Silicon Valley during the 1990s. He lead the initial stock offerings of technology giants like Cisco Systems and Amazon.com that often soared to unheard-of heights in their first days of trading. With that success, Quattrone and First Boston came under the microscope of regulators and prosecutors, who began investigating whether the bank was making investors pay kickbacks in exchange for access to hot stock offerings, though such a case was never brought.
The verdict, together with the unorthodox egalitarian public offering announced last week by the Internet search giant Google, may represent the beginning of an enormous sea-change in the way Wall Street does business as it seeks to distance its business from some of the more controversial practices of the 1990s.
The verdict is also vindication for federal prosecutors in Manhattan, who failed to win the same case against Quattrone last fall. The U.S. attorney’s office had been widely criticized for bringing an obstruction case instead of a case based on the underlying crimes that they were initially investigating.
Secret Warrant Requests Increased in 2003THE NEW YORK TIMES -- WASHINGTON
The government’s use of secret warrants to monitor and eavesdrop on suspects in terrorism and intelligence investigations continued to climb sharply in 2003, with more than 1,700 warrants sought, the Justice Department reported Sunday.
Federal authorities made a total of 1,727 applications last year before the Foreign Intelligence Surveillance Court, the secret panel that oversees the country’s most delicate terrorism and espionage investigations, according to the new data.
The total represents an increase of about 500 warrant applications over 2002 and a doubling of the applications since 2001, the Justice Department said in its report, which was submitted to the federal courts and to Vice President Dick Cheney as required by law.
All but three of the applications for electronic surveillance and physical searches of suspects were approved in whole or part by the court. The Justice Department said it did not appeal any of the rejections, but it noted that in two of those cases, warrants were ultimately approved after changes were made in the applications. No details were provided about the investigations.
Civil liberties advocates maintain that the sharp rise in the government’s use of the secret warrants, made easier by the antiterrorism law known as the USA PATRIOT Act, represents a worrisome trend because the authorities are held to a lower standard of proof in spying on suspects than they would be in seeking traditional criminal warrants.
States’ Tax Receipts Rise, Leading To Some SurplusesTHE NEW YORK TIMES -- WASHINGTON
States across the country are reporting stronger tax collections this spring for the first time in three years, fueling hopes that the bleakest budget-cutting days of the economic downturn are over, state officials and fiscal experts said.
From Florida to Oklahoma to Oregon, tax revenues are up in recent months from the same period last year, the first consistent increases many states have experienced since Wall Street’s bubble burst in 2001.
“Our economy has bottomed out and is improving slightly,” said Ken Rocco, a fiscal officer for the Oregon Legislature, echoing the comments of many state budget officials.
Stronger-than-anticipated tax revenues combined with tight spending practices over the past few years are allowing 32 states to finish their 2004 fiscal years with surpluses, according to a survey by the National Conference of State Legislatures.
But most of those surpluses are small and a dark cloud remains: Tax revenues are not growing fast enough to offset the rapidly rising costs of Medicaid, pensions and education, which account for most of state spending.
As a result, 33 states faced projected revenue shortfalls in their 2005 budgets, and about 20 are still struggling to close them, the survey, released last week by the conference, said. Most states’ fiscal years begin on July 1 or Oct. 1.
According to the survey, 30 states reported in March that personal income tax collections were at or above projections. In 36 states, sales taxes are coming in at levels as good as or better than forecast. And corporate income taxes are coming in on or above target in 37 states.
California has the worst budget problem by far, projecting a $15 billion gap in its 2005 budget. But for most states, the estimated shortfalls are significantly smaller than the yawning gaps they had to close in recent years, experts said.
“Yes, revenues are improving, but for almost all states, it is not enough,” said Robert Kurtter, senior vice president for state ratings at Moody’s Investors Service. “Fiscal ‘05 is continuing to be a difficult budget year.”