Lawyers leave nothing uncontested
By Anthony Accetta
March 21, 2007
Lawyers for Joe Nacchio suggested Tuesday that this case is just one horrible misunderstanding. Apparently the government doesn't know the difference between a public document and a motivational speech.
Opening statements are supposed to be an overview into what the prosecution will prove and what the defense will show, if anything, to belie that proof. Tuesday's opening statements in the insider-trading trial of Joseph Nacchio, however, more resembled closing arguments, replete with charts, recordings and readings from, as well as enlarged marked-up photos of, numerous documents not yet admitted into evidence, yet mysteriously permitted by the court to be read to the jury.
Assistant United States Attorney James Hearty was as earnest as a dedicated prosecutor could be. Hearty is recognized as the sole survivor of the original prosecution team, and the one man on the team who knows the case inside out. He methodically and deliberately described the government's case as revolving around a series of public statements made by Joe Nacchio which, it is alleged, Nacchio knew to be false, and which resulted in Qwest stock remaining at artificially high price levels while Nacchio did everything in his power to dump millions of options out of greed and a desire to avoid the inevitable plunge in the value of Qwest stock which would result if the public only knew the truth about Qwest's true condition.
Hearty told the jury this is a case about "cheating." And nobody likes a cheater.
There was no cheating, said an initially indignant former United States attorney and Federal District Court judge from New Jersey, Herbert Stern. With a passion that appeared honed, defense attorney Stern proclaimed that the indictment is wrong, that Nacchio never used material nonpublic information in the exercise of stock options and the sale of that stock in the public markets. Indeed, said Stern, every word said in the company's public statements was true, and Nacchio is being prosecuted because he was a cheerleader for Qwest and a passionate motivational speaker to Qwest management when he went along with Lehman Brothers and Donaldson, Lufkin and Jenrette - two powerhouse Wall Street investment banks - in touting projections those Eastern giants made about Qwest revenue expectations.
After all, Stern seemed to say, everybody knows not to believe in projections, and the warnings placed about forward-looking statements on Qwest's SEC filings gave ample notice to the public that it should not rely on a thing anybody read.
Further, Stern continued, Nacchio really and truly didn't want to sell his stock. It was circumstance that required him to do it.
It will be up to the government to prove that the words in the indictment that refer to Nacchio's use of nonpublic material information are not to be confused with internal bickering over internal budget disputes, and that Nacchio knew not just that his staff disputed budget predictions but knew that Qwest was materially not what he said it was when he spoke the words that raised the price of the stock he promptly sold.
Opening statements are a road map of each side's case. Tuesday, it became clear that nothing about this case will be uncontested. Tuesday was a day for ponderous detail, and a lot of promises. Not all of them will be kept.
Anthony Accetta is a former assistant U.S. attorney in New York and former first assistant attorney general and special prosecutor in Colorado. He has prosecuted many white-collar- crime cases and, through his Denver-based Accetta Group, helped investigate investment banker Frank Quattrone, who later was prosecuted for obstruction of justice.