Nacchio retains his firm grip on charm
By Al Lewis
Denver Post Columnist
March 21, 2007
Joe Nacchio took my hand in one of those long, friendly grips during a court recess on Tuesday.
"I know I shouldn't talk to you," he said, leaning into me as we stood in the courtroom. "But I really appreciated the first line on that NSA column."
I often forget what I write so it took me a moment to recall the line. It was indeed one of the nicest things I ever wrote about the former chief executive of Qwest. On May 12 last year, I wrote:
"It pains me to say this, but perhaps no telecommunications executive has done more to protect American civil liberties than Joe Nacchio - an argument that bodes well for the former Qwest CEO in his upcoming trial. ...
"Nacchio just said 'no' when the U.S. National Security Agency demanded phone records of Qwest customers after the Sept. 11 attacks. Executives at AT&T Inc., BellSouth Corp. and Verizon Communications Inc. did not have any such concern for customers' privacy."
I gave Nacchio a puzzled look as I recalled these lines. It's easier to remember less flattering things I've written.
"I know that had to kill you," Nacchio smiled.
"It didn't kill me," was all I could think of to say in response.
If Joe and I have a relationship, it's been a strained one. The poor guy must think I relish watching him sweat under the inquisitive eyes of the jury. But I don't. I've always thought of Nacchio as just another overpaid CEO who made some bad calls and nearly blew up our local phone company. Beyond that, and the thousands of people he destroyed doing it, I've always found him personable, though sometimes argumentative.
The truth is, I like Nacchio. Who else has given me so much to write about?
I am also a fan of Nacchio's attorney, former federal prosecutor and judge, Herbert Stern. I've recently read through volumes of his writings and watched several hours of instructional videotapes for attorneys that he made in 1985.
"You look so much better in person," I told Stern, much like the groupie I've become. I was flattered that he recognized me. He even smiled and responded, "I am Dorian Gray in reverse."
This was a reference to a literary figure who bartered his eternal soul in exchange for eternal youth. I'm not sure if Stern was intimating that he had aged a bit since 1985, or that he would never, ever barter with his eternal soul.
Watching the trial, I thought assistant U.S. Attorney James Hearty did a marvelous job of laying out the case against Nacchio. At one point, he said that Nacchio had canceled a pre-announced plan to sell his stock options so that he could embark on a far more aggressive sales plan.
"The evidence will show Mr. Nacchio's (original) plan solved all his problems but one," Hearty said. "It didn't allow him to sell his shares fast enough."
In an hour and a half, Hearty explained how Nacchio talked up Qwest stock as he sold it on the market. It was a straightforward description of the old pump-and-dump. Then in two and a half hours, Stern muddled it with details.
Qwest founder Phil Anschutz lavished Nacchio with stock options to lure him from AT&T, Stern said. Anschutz even paid $11 million of his own money to buy Nacchio out of his AT&T options. The Qwest options Nacchio received were "golden handcuffs," Stern explained.
Nacchio wanted to quit as early as January 2001 after his son attempted suicide, Stern said. But Anschutz and the board kept pouring on the options.
These options could only be cashed in specific periods and had expiration dates. When Nacchio sold stock, it was because he had to.
"It was use them or lose them," Stern said.
Stern promised to bring Anschutz to the stand to prove this claim. It will be fun to see the guy who made billions at Qwest defend a guy who made only hundreds of millions.
In his opening argument, Stern made only a passing reference to Nacchio's "I spy" NSA defense. In pre-trial arguments, Stern has argued that only Nacchio knew of secret government contracts Qwest was about to land in 2001. This knowledge added to Nacchio's belief that Qwest would meet its aggressive growth projections, even at a time when other companies were forecasting a downturn.
Based on Stern's opening, I predict we won't hear much of the "I spy" defense. It has already served its purpose. It kept prosecutors busy as they prepared for trial. They had to go into special, lead-lined rooms - like secret agent Maxwell Smart - every time they wanted to counter this argument. It tied them up for countless hours.
The "I spy" defense also portrayed Nacchio as a hero. He didn't turn over customer information to the government, like the others. So you see, even Nacchio's stubbornness has a bright side.
Ultimately, Nacchio's guilt or innocence on 42 insider-trading charges is a technical, legal matter for the jury to decide. I wish him well in this trial.
And it doesn't kill me to say it.
Al Lewis' column regularly appears Sundays, Tuesdays and Fridays. Respond to Lewis at denverpostbloghouse.com/lewis, 303-954-1967 or email@example.com.