The Association of U S West Retirees



Nacchio jury goes home 
By Andy Vuong and Tom McGhee, Staff Writers 
Denver Post 
Thursday, April 5, 2007

The insider-trading trial in federal court of former Qwest CEO Joe Nacchio concluded its third week of testimony around noon today, with only one more witness scheduled to testify for the defense.

The trial was expected to take seven to eight weeks.  But U.S. District Judge Edward Nottingham told the jurors before excusing them for the rest of the week that the trial could finish next week.  The jury returns Monday.

On the issue of whether Nacchio will take the witness stand in his own defense, Nottingham gave Nacchio's lawyers until 5 p.m., Saturday, to tell him if Nacchio will testify.  The jury was dismissed early in order to allow time for the defense team to turn over documents on Nacchio's stock trades to prosecutors.

The only
remaining witness listed by defense lawyers to testify is law professor Daniel Fischel, who is scheduled to testify Monday.  Fischel has testified for defendants in a number of high-profile cases, including the Enron case.  Nottingham was visibly annoyed that the defense wants more time to decide whether to put Nacchio on the stand.

Prosecutors wanted Nottingham to tell Nacchio's lawyers to make the decision over the lunch hour today.

"In every trial there comes a decision whether the defendant is going to testify.  They should be required to make that decision over the lunch break," Assistant U.S. Attorney Cliff Stricklin told the judge.

Nottingham replied that the defense will call him by 5 p.m., Saturday, with a decision.

Earlier this morning, business mogul Philip Anschutz, who hired Joe Nacchio in 1996 to head the company that became Qwest Communications, testified about an emotion-laden meeting in 2001 where a tearful Nacchio told him he wanted to quit because his son had tried to commit suicide.

But Nacchio never left after he was given an additional 5 million stock options, a salary increase and increased bonuses, Anschutz said under cross-examination by federal prosecutors.

Anschutz was the first witness for the defense in Nacchio's insider-trading trial this morning in federal court in Denver.

"The compensation comittee certainly wanted to keep Mr. Nacchio as CEO and they had come up with a plan to incent Mr. Nacchio to stay," said Anschutz, who founded Qwest.

Nacchio did take some time off and returned home to his family during the period in 2001, Anschutz said.

Anschutz said he first contacted Nacchio at the suggestion of investment bankers after he told them that he wanted to take his fibre-optic cable company, SP Telecom, later named Qwest, public.  It was 1996 and he had invested or committed to invest about $1 billion in the company, which was laying fiber along railroad rights-of-way he owned.

Anschutz at one time owned the Southern Pacific and Rio Grande railroad companies, and had served on the board of directors of the Union Pacific Railroad.

Saloman Brothers analyst Jack Grubman told him that Nacchio, then at AT&T, had the experience needed to build and run the communications company, which later merged with the Baby Bell U.S. West.

"He was good and he was also bright," Anschutz said of Nacchio in a halting voice tinged with a Western accent.

Nacchio negotiated a $600,000 annual salary, stock amounting to 3 percent of the company's $1 billion value at the time, and received $11.3 million to leave AT&T.  Nacchio also asked to have Qwest headquarters be located in New Jersey in order to be close to his family.

Anschutz kept the company in Denver but allowed Nacchio to have an office in New Jersey, commuting to Denver for four-day weeks and travelling home for three-day weekends.

Anschutz spent about 45 minutes on the witness stand this morning.

On Wednesday, federal prosecutors rested their case after questioning 20 witnesses over 10 days.

After the prosecution rested, defense attorneys filed an almost routine motion for acquittal, which U.S. District Judge Edward Nottingham denied.

This morning, Nottingham also denied defense motions for a mistrial connected to what they termed "prejudicial" testimony from two government witnesses.

Nottingham, however, did strike testimony from Qwest shareholder Sally Anderson and granted the defense's motion to redact a document connected to testimony from David Weinstein, Nacchio's former financial adviser.

The defense said its case may take a day and a half, not including whether or not Nacchio will testify.