fraud isn't part of Nacchio case
Prosecutors write that the ex-Qwest CEO's claim of what's
needed to prove insider-trading charges isn't true.
By Greg Griffin, Staff Writer
Saturday, January 21, 2006
The government will not try
to prove accounting fraud in its criminal insider-trading
case against former Qwest chief executive Joe Nacchio,
prosecutors said in a filing Thursday.
"The defendant asserts that the government will have to
prove that Qwest falsely and deliberately reported its
financial results with the defendant's knowledge. This is
not true. ... This case does not involve proof of accounting
irregularities or fraud," the government wrote in a status
report filed on the eve of a hearing on evidentiary and
"Even if Qwest accurately reported its financial results,
disclosed every fact required to be disclosed by law ... the
defendant is still criminally responsible for insider
trading if he was aware of material inside information at
the time of his trades," the government said.
The filing was a page longer than the government's Dec. 20
indictment against Nacchio and shed more light on how
prosecutors plan to execute their case against Nacchio, who
was Qwest's CEO from 1997 to 2002.
Nacchio is charged with 42 counts of illegal insider trading
for sales of $100.8 million in Qwest stock between January
and May 2001. Prosecutors say during that time Nacchio knew
that Qwest was in worse financial shape than he and the
company were reporting to the public and could not possibly
meet performance expectations.
Nacchio has pleaded not guilty to each charge.
Nacchio's lawyers could not be reached for comment late
In their Thursday filing, prosecutors said they plan to
present evidence in 11 areas, including source documents
proving Nacchio made the trades; Qwest policies on insider
trading; public financial disclosures by Qwest and analyst
reports; internal Qwest documents showing what Nacchio knew
about the company's financial condition; internal documents
related to the lowering of Qwest's stock guidance in
September 2001; Qwest codes of conduct; minutes from
meetings of Qwest's board of directors; grand jury
transcripts; Qwest video- and audiotapes; reports of
interviews with law-enforcement officials; and Nacchio's
Also in the filing, prosecutors said Nacchio knew when he
made the trades that "Qwest's financial targets for 2001
were a 'huge stretch' to begin with, that Qwest could not
make its 2001 targets unless recurring revenue sources
increased significantly and at a greater rate than Qwest had
"In fact, all the things the defendant was warned about, and
which were undisclosed, came to pass to the detriment of
Qwest's shareholders," prosecutors said.
Staff writer Greg
Griffin can be reached at 303-820-1241 or email@example.com.