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Judge Denies Nacchio Case Dismissal Motion
By Sandy Shore, AP Business Writer
Saturday, March 25, 2006

DENVER (AP) - A federal judge refused Friday to dismiss a 42-count insider trading case against former Qwest chief Joseph Nacchio but ordered prosecutors to give his attorneys detailed information about financial documents on which they based the allegations.

U.S. District Judge Edward Nottingham also said he hoped to start a trial in the fall but would not set a date until he had a better idea of issues that may arise as a result of Nacchio's classified business dealings with the government.

Defense attorneys have been unable to question Nacchio about classified information he may have as a result of those dealings which they believe gave the former chief executive officer hope about financial prospects for Qwest.  The phone company later restated billions of dollars in revenue in wake of an accounting scandal.

Attorney Herbert Stern told Nottingham the lawyers just received the security clearance Friday that will allow them to interview Nacchio and review the documents before deciding whether any can be used in his defense.  They hope to set up the meeting by April 21.

Nacchio, 56, was absent from the late afternoon hearing which dealt primarily with defense motions seeking more information about the specifics behind the indictment that was handed up in December.  The next pretrial conference was set June 9.

Nacchio has been accused of selling $101 million in stock in 2001 based on inside knowledge that Qwest Communications International Inc. would be unable to meet revenue targets because it had improperly used nonrecurring revenue to meet those goals.

Each count carries a penalty of up to 10 years in prison and a $1 million fine. Nacchio has pleaded not guilty and remains free on bail.

In a motion to dismiss, defense attorneys argued the indictment lacked specifics to support allegations that Nacchio knew Qwest's public statements about financial targets were "extremely aggressive" and a "huge stretch" as stated in the charges.

"The accuracy of the projections by Qwest are at the heart of the case," Stern told Nottingham.

The judge ordered prosecutors to identify for defense attorneys the material nonpublic information, financial targets and historical data that they referred to in the indictment.