Nacchio 'constantly' upbeat
Adviser testifies ex-CEO believed stock would rise
By Sara Burnett
Rocky Mountain News
Friday, March 30, 2007
Former Qwest CEO Joe Nacchio told his financial
adviser "constantly" in 2000 and 2001 that he believed in the
future of the company and expected Qwest's stock price to rise,
the adviser testified at Nacchio's insider trading trial
Thursday. David Weinstein, who gave Nacchio financial advice
for nearly 20 years, told jurors he encouraged Nacchio to
diversity by selling more options but that Nacchio wanted to
wait until the stock price went higher.
"You know Joe Nacchio well," defense attorney Herbert Stern
said. "Do you believe he was telling you the truth?"
"Yes," Weinstein said.
The testimony contradicts prosecutors' allegations that Nacchio
unloaded nearly $101 million in Qwest stock in early 2001
because he had inside information that the stock price was about
Prosecutors called Weinstein to the stand Thursday hoping he
also would testify that Nacchio tried to "hide" $90 million in
assets in 2002 by putting them in his wife's name. Assistant
U.S. Attorney Kevin Traskos argued in a court filing that moving
the assets showed Nacchio knew he had done something wrong.
But U.S. District Judge Edward Nottingham ruled Thursday morning
that Weinstein couldn't talk about moving the assets, saying it
would unnecessarily prejudice the jury against Nacchio, who may
have made the transfer for any number of reasons.
Nottingham also noted the assets were moved nine or 10 months
after the time frame covered in the government's indictment, and
he said he doesn't want jurors to hold Nacchio's wealth against
"There is a danger that the jury will . . . draw the inference
or find the defendant guilty solely because he is a wealthy man
who in February 2002 decided to transfer assets," he said.
Under questioning by First Assistant U.S. Attorney Cliff
Stricklin, Weinstein detailed conversations he had with Nacchio
about entering into a stock sales plan and said Nacchio told him
on Dec. 9, 2000, that he was signing papers for the deal.
Stricklin, who also referenced a "dishonest act" by Nacchio,
didn't get into the issue further, but prosecutors are expected
to do so as they continue their case next week. During opening
statements, fellow prosecutor James Hearty told jurors that the
document, which stated Nacchio had no "insider" information, was
later backdated to Nov. 3, 2000 -- prior to a series of warnings
from Qwest executives that the company was in trouble.
Weinstein also testified that in December 2000 Nacchio had
assets of $547 million, including $200 million in Qwest stock
options, and about $51 million in cash.
Earlier Thursday, James A. Smith -- the former executive vice
president of Qwest's consumer and small-business unit --
testified that the 2001 revenue targets set for his unit were
"an impossibility." When he told Nacchio so, the CEO didn't
want to hear it, Smith said.
"The routine response was that the targets were the targets,"
He was the latest in a string of prosecution witnesses to
testify that Nacchio set earnings targets too high and that they
were warning him the numbers couldn't be met months before
Nacchio alerted Wall Street.
The day ended with former Qwest President and Chief Operating
Officer Afshin Mohebbi taking the stand. Prosecutors say
Mohebbi, who is expected to continue testifying Monday morning,
also issued warnings to Nacchio, including an e-mail message in
which he called the revenue targets a "hugh" stretch.
- Court will not be in session today. The trial resumes
Monday with the testimony of former Qwest Chief Operating
Officer Afshin Mohebbi
burnetts@RockyMountainNews.com or 303-954-5343