The Association of U S West Retirees



Qwest ex-CEO's trial means a lot to many
Joe Nacchio's federal trial will be watched closely by many who were affected by the company's roller-coaster fortunes when he was at the helm.
The Denver Post - Editorial
Monday, March 19, 2007

Today begins the insider trading trial of Joe Nacchio, a man once at the top of the Denver business world but now accused of unloading $100.8 million of company stock because he knew Qwest was heading for financial disaster.

The Denver federal court trial, expected to last eight weeks, has promise to be many things to different people.  For investors who suffered big losses, it could be a chance to see the brash executive punished.  To those who lost jobs as the company veered near bankruptcy, it might be a way to see the reviled CEO get his comeuppance.

Federal prosecutors will try to prove that Nacchio knew the company was in serious financial trouble in early 2001 as he sold 2.5 million shares of the company's stock.  The company didn't begin publicly disclosing Qwest's financial troubles until later that year.  Prosecutors likely will rely on testimony from other former executives, including former chief financial officer Robin Szeliga and former president Afshin Mohebbi.

The defense, led by former federal judge Herbert J. Stern, is expected to rely on a unique strategy that is wrapped in national security concerns.  Nacchio's lawyers have argued that he was alone in knowing of the possibility the company would get top-secret government contracts that would boost the company's bottom line.  Much of the pre-trial maneuvering has focused on how and whether that information could be discussed in open court.

Nacchio faces up to 10 years in prison and a $1 million fine for each of the 42 counts of insider trading he faces.

It is a poignant point in the arc of Nacchio's career.  He arrived in Denver a decade ago, fresh from his post as the No. 3 executive at communications giant AT&T.  Phil Anschutz, a Denver railroad and real estate magnate, had hired him to head tiny Qwest Communications, a private startup.

Nacchio presided over a $297 million initial public offering that was to help finance a $1.4 billion, coast-to-coast fiber-optic network.  In 2000, Nacchio engineered Qwest's $48 billion merger with phone company U S West, a move that ultimately angered many of U S West's retirees who suffered financial losses.  He had big ambitions, telling The Post that Qwest would become global in scale.  And he managed to propel Qwest into a major player before the company suffered huge financial losses, its stock value plunged and he was pushed out in 2002.

The federal trial may not assuage the ill feelings left behind by Nacchio, but fairly conducted proceedings are an opportunity for some measure of closure for those who believe they suffered financially at his hands.