decision: Will Nacchio testify?
Lawyers say there's a big risk in putting the former Qwest CEO
on the stand. Would his hot-tempered, arrogant side come out?
Greg Griffin, Staff Writer
Sunday, March 4, 2007
Will Joe Nacchio testify?
And if he does, which Joe Nacchio will prevail on the stand --
the one who wooed Wall Street and others in 1999 and 2000 or the
one who lashed out at critics in 2001?
Much will turn on the answers to these questions during the
former Qwest chief executive's criminal insider-trading trial,
which begins March 19. Many people will be watching in Colorado
and other states where Qwest operates.
"I would love to see him take the stand," said Qwest employee
Brent Pilloud, 52, of Aurora. "I would like to see if the man
has any hint of decency. If he's willing to say 'Yeah, I took
too much.' "
Pilloud said he may try to take a day off work to watch Nacchio
testify. Nacchio has pleaded not guilty.
For Denver, which hasn't seen a white-collar criminal trial of
this scope since the Silverado savings-and-loan scandal of the
late 1980s, Nacchio's testimony could be riveting.
Nacchio was known as a hard-driving and hot-tempered chief
executive who often used intimidation to get results. But he
also was a smooth salesman for his vision of Qwest as a globally
dominant telecommunications and technology company.
He orchestrated an audacious takeover of US West in 2000 but
never won over many of the phone company's workers. Some lost
their jobs and others lost their savings as Qwest's share price
plummeted from more than $60 in 2000 to $1.11 in August 2002.
As his trial on 42 counts of insider trading approaches, no
decision is bigger for the New York native and his lawyers than
whether or not he takes the stand. Though Nacchio is
undoubtedly preparing for his testimony, his lawyers may not
make the call until late in the trial. They declined to comment
for this story.
If Nacchio doesn't testify, jurors may suspect he is hiding
something. On the stand, however, Nacchio could lose his
composure or contradict himself under cross-examination.
"There's brutal risk associated with taking the stand," said
former prosecutor Greg Goldberg, an attorney with Holland &
Hart. "But you just know it's in the back of the jurors' minds
... 'If there was a rational explanation for this stuff, he
would give it to us.' "
The consensus among legal experts is that Nacchio is more likely
than not to testify. The case centers on whether Nacchio used
inside information when he sold $100.8 million in Qwest shares
in early 2001.
No one else may be able to explain his motivation for those
Recent high-profile corporate-fraud cases give little guidance
as to the right strategy.
Enron's Ken Lay came across as arrogant and short-tempered on
the stand, even snapping at his own attorney. He was convicted,
and died before sentencing. Jeffrey Skilling kept his ego in
check but stumbled on credibility issues during his Enron
testimony, experts said. He, too, was convicted.
WorldCom's Bernie Ebbers was found guilty after testifying that
he didn't understand accounting and was unaware that fraud was
happening. HealthSouth's Richard Scrushy did not testify, and
he was acquitted in his first trial.
But Martha Stewart didn't testify and a jury found her guilty,
while former Qwest senior vice president John Walker was
acquitted in 2004 after taking the stand.
Scrushy's testimony was a matter of debate among his attorneys.
Birmingham, Ala., lawyer Jim Parkman believed they had already
won when the government rested its case.
"There was really nothing Richard could have added. Why put him
up there and risk making a mistake?" Parkman said.
Scrushy wanted to testify but eventually agreed with Parkman.
The greatest risk for corporate executives on the stand is a
display of arrogance, anger or lack of remorse, Parkman said.
It's rarely a problem under direct examination, but defendants
can lose their composure under aggressive cross-examination by
"You never want someone with a big ego to show that," Parkman
said. "That sends a message to the jury, 'I don't care what
anyone else tells me, I'm going to do what I want.' "
Added Denver attorney Steve Peters, who represented John
Walker: "It can be difficult to break an arrogant witness of
Nacchio was prone to the occasional public display of anger or
arrogance. After Morgan Stanley analysts began criticizing
Qwest's accounting and earnings projections in mid-2001, Nacchio
"Innuendos on our integrity are not going to be tolerated,
including from what I used to consider a reputable firm like
Morgan Stanley," Nacchio said during a conference call, calling
the analysts' criticisms "hogwash."
He later added: "It is sad, the quality of analysis going on at
that firm. ... It's very frustrating for us in the industry when
we have analysts who can't grasp these concepts."
After the merger with US West, Nacchio upset workers by
referring to them as clowns.
"Because you wear a clown suit doesn't mean you work for the
circus. We'll take off the suits and get down to work, then
we'll send out the clowns," he told The Street.com.
Behind closed doors, Nacchio was even more defiant, according to
a transcript of an early 2002 meeting with top Qwest advisers.
"I'd like to get some of these (expletive) analysts and what
they were writing 18 months ago, and ask them -- if they're
full-time trying to analyze things -- how come they got it so
(expletive) wrong?" Nacchio said.
But Nacchio has a smoother side that was on display as he
convinced investors, regulators and analysts to support Qwest's
bid for US West in 1999 and 2000.
"This company will be ... like Qwest on steroids," Nacchio told
Colorado regulators in September 1999. "I know there are
service issues. I know there also are issues about local
competition. It's our belief that Qwest's merger with US West
will improve both of these issues."
A few months later, he told shareholders: "This company is
about taking advantage of the enormous explosion of growth of
the Internet. There aren't going to be telephone companies in
the next few years."
In his eight-volume set of books, "Trying Cases to Win" Nacchio
lead attorney Herbert Stern is mum on the issue of whether or
not to put a defendant on the stand.
Perhaps that is because the book is based largely on his
experiences as a federal prosecutor and judge in New Jersey.
But Stern has plenty of advice on how to prepare witnesses to
testify. He rejects popular methods including practice
testimony before a video camera or in a mock courtroom.
Stern said he asks practice questions of his witnesses in themes
rather than in the order they will be asked during testimony, to
avoid a wooden or scripted appearance.
"A witness who knows his facts, who understands their
significance ... who feels that he can defend the positions he
will be taking in his testimony -- such a witness is not only
very well prepared; he is a working partner on the witness
stand," Stern wrote. "He can confidently follow your lead and
moves, much like a dance partner."
Staff writer Greg Griffin can be reached at 303-954-1241 or
FROM KEN LAY'S TESTIMONY
"I did everything I could humanly do. ... Did I make mistakes?
I'm sure I did ... I had to make real-time decisions based on
the information I had at the time."
"There have been very few people in history who have been more
investigated than I have and my family. Who knows how many
people, how many resources, how many dollars?"
JEFFREY SKILLING'S TESTIMONY
"Did I ever give anyone any instruction to change the results of
the quarter? I did not."
"This type of conduct has nothing to do with cookie-jar
BERNIE EBBERS' TESTIMONY
"I know what I don't know, and I, to this day, don't know
technology, don't know finance and accounting, but ... actually,
I always thought I was a pretty good coach."
"I never thought anything like that had gone on. I put those
people in place. I trusted them. I just had no earthly idea
that anything like that would have occurred."