Feds may be compelled to lift blinds
By Andy Vuong, Staff Writer
Wedneday, March 7, 2007
National-security issues could become a land mine for the
government and turn into a central focus of the criminal
insider-trading case against former Qwest chief executive Joe
Nacchio, experts say.
The government may ultimately have to allow Nacchio, if he
testifies, to reveal classified information or face the prospect
of the judge dismissing the charges.
Legal experts expect Nacchio, who contends he needs to use
top-secret information to defend himself, to take the stand.
"Things can get complicated at trial," said attorney John Cline,
a leading expert on national-security-related defenses.
U.S. District Judge Edward Nottingham has already ruled that
some classified information is relevant to Nacchio's defense.
How that information will be presented during trial is still
The trial is set to begin March 19 in federal court in Denver.
At a pretrial hearing in January, when federal prosecutors
complained about the difficulties of getting clandestine
agencies to produce documents in a timely manner, Nottingham
raised the point that the government could drop the case.
"There may be instances"
Federal rules state that "there may be instances where it is so
critical that the government keep information classified that it
would forgo prosecution of somebody," Nottingham told
prosecutors. "Now, I'm not suggesting that this is that kind of
case. But ... it's the agencies themselves who know what it is
that is important to keep classified."
Nacchio's attorneys have said he was bullish on the company at
the time because he believed Qwest was in line to receive
hundreds of millions of dollars in contracts from top-secret
That defense strategy has engulfed the case.
Nottingham has closed all or a portion of a half-dozen hearings
since August to discuss classified information.
Another closed-door meeting is scheduled for Friday, and experts
say such hearings may occur throughout the trial.
National-security issues have been used many times as part of a
defense, but Nacchio's case is believed to be the first
white-collar fraud case without international implications to
use the strategy, Cline said.
Experts said national-security matters appear to be a valid part
of Nacchio's defense. Before his ouster from Qwest in June 2002,
Nacchio served on two federal advisory panels dealing with
national-security issues: the Network Reliability and
Interoperability Council and the National Security
Telecommunications Advisory Committee.
Feds "in a tough spot"
The former was formed by the Federal Communications Commission
to bring together officials from the telecommunications industry
to explore and recommend measures that would enhance network
reliability. The latter advises the president on issues related
to implementing national security and emergency-preparedness
"The fact that it puts the government in a tough spot is not the
defendant's fault," said former federal prosecutor John
Vandevelde, a white-collar criminal defense attorney in Los
Angeles. "It's something the defendant's entitled to do, and
the judge has already ruled to that effect."
Under guidelines set forth by the Classified Information
Procedures Act of 1980, the government is allowed to propose
substitutions for the classified information Nottingham has
ruled is relevant to the case.
The substitutions can come in two forms: an admission by the
government of relevant facts that the classified information
would prove or an unclassified summary of the information.
Nottingham has to decide whether the government's proposed
substitutions, submitted to the court last week, would give
Nacchio the same ability to make his defense as if he were
introducing the actual classified information.
Cline, an attorney with Jones Day in San Francisco, expects
Nottingham to rule on the issue before the trial starts and
allow the substitutions. But the ruling would probably be
If Nacchio testifies, the matter could be revisited.
"If he testifies, he will probably want to explain his state of
mind -- his thinking at the time -- and it's tough for a
defendant to do that if he has to use what is in effect a script
written by the government," Cline said. "That's a difficulty on
"It's even tougher on cross because if he provides his
explanation and the government attacks him on cross and suggests
that he's not credible -- that he didn't believe what he said he
believed and so on -- the government may be opening the door to
use of the classified information that the judge has previously
During the trial, if Nacchio's attorneys feel he or another
witness should be allowed to disclose classified information,
they can request another closed-door hearing to review the
Delay in case possible
If the disclosure of classified information is ultimately
allowed by Nottingham, the government can take the issue to an
appellate court midtrial, possibly delaying the case. The
appeal would be handled on an expedited process.
The government can also simply choose to not allow the
classified information to be disclosed. If that happens, the
judge can throw out the case, Cline said.
Even if Nacchio isn't allowed to disclose classified
information, his testimony may reveal how companies win secret
contracts from the government.
"There is a side of these often shrouded and somewhat secretive
engagements during this era that do result in positive
transaction or revenue outcome for the companies, though it
tends to be hidden from public view," said Ron Suskind, author
of "The One Percent Doctrine," which covered examples of how
companies worked with the government behind closed doors in its
fight against terrorism.
Nacchio's testimony "may well provide a window into how these
conversations between government and large corporations are
proceeding," Suskind said. "That's why people are interested in
what Joe has to say."
Staff writer Andy Vuong can be
reached at 303-954-1209 or