faced "big problems"
In it's insider-trading case against Joe Nacchio, the
government shows an e-mail advising him to "crank up"
By Greg Griffin, Staff Writer
Tuesday, January 24, 2006
Qwest's former president
warned then-chief executive Joe Nacchio by early 2001 that
the company faced "big problems" if it didn't "crank up" its
revenue from operations, according to court filings released
In an e-mail, then-president Afshin Mohebbi told Nacchio
that the company needed $ 580 million in one-time revenue
items to make its first-quarter target of $5.1 billion.
"It's doable but if we don't crank up recurring growth by
April, we got big problems," Mohebbi wrote.
The e-mail is one of several pieces of government evidence
unsealed by the court Monday in the criminal insider-trading
case against Nacchio.
Prosecutors say that when Nacchio sold $100.8 million in
Qwest stock from January 1002 to May 2001, he was aware of,
but did not disclose to the public, the company's looming
Nacchio has pleaded not guilty. He is free on $2 million
bond. Mohebbi has agreed to testify for the government.
The previously undisclosed e-mails appear to show Qwest
executives scrambling to make their targets by booking
one-time revenue items, such as sales of network fiber-optic
capacity. Those deals, booked upfront before cash was
received, are the focus of a separate Securities and
Exchange Commission action against Nacchio, Mohebbi and
In a Jan. 2, 2001, e-mail to then-chief financial officer
Robin Szeliga, also unsealed Monday, Mohebbi also referred
to one-time deals.
"We have done a great job of doing the one time things and
that cannot continue," he said. "We need the recurring to
take off big time by end of first quarter or we are
In its indictment, the government did not charge Nacchio
with accounting fraud related to the one-time deals. But
the criminal insider-trading case hinges on whether Nacchio,
at the time he sold his stock, was aware of important
financial information about the company that wasn't
disclosed to the public.
The disclosures were made in a group of documents unsealed
Monday on a judge's order. The government is trying to
thwart Nacchio's effort to use a national-security-based
In their filing, prosecutors argued that Nacchio's attorneys
should not be allowed to introduce as evidence classified
documents related to Qwest's government contracts.
"Classified information is wholly irrelevant to the issues
framed by the indictment," prosecutors said.
Nacchio's attorneys are seeking federal security clearance
to review classified documents related to Qwest's government
contracts. At the time of this stock sales, Nacchio sat on
an industry panel that advised the government on security
Naccio wants to use the classified information to argue that
his rosy outlook for Qwest in 2001 was based on his
knowledge that the company was in line to receive large
"Mr. Nacchio's knowledge as respects certain anticipated
government contracts is one of the key elements to his
defense," his attorneys said in a filing also unsealed
The government, however, said that classified contracts
accounted for less than 1 percent of Qwest's revenues in
2001 and were not expected to grow.
Staff writer Greg
Griffin can be reached at 303-820-1241 or firstname.lastname@example.org.