case proceeds vs. Nacchio
In the wake of last week's guilty verdict, a judge rules that
the SEC can begin requesting evidence in its fraud case.
By Andy Vuong, Staff Writer
Friday, April 27, 2007
The U.S. Securities and Exchange Commission can begin requesting
interviews, documents and other evidence from Joe Nacchio as
part of its civil fraud case against the former Qwest chief
executive and a handful of his one-time lieutenants, a
magistrate judge ruled Thursday.
Much of the case in regard to Nacchio had been put on hold
because of the Justice Department's criminal case against him,
which wrapped up last week with his conviction on 19 counts of
illegal insider trading. He was acquitted on 23 other
insider-trading charges. The Justice Department had been
concerned that discovery in the civil case would affect the
criminal case while it was in progress.
Nacchio's attorney Joel Silverstein on Thursday asked Magistrate
Judge Craig Shaffer to continue the stay pending Nacchio's
appeal of the criminal conviction. Shaffer denied the request,
indicating that he didn't want to give Nacchio a "blank check"
to block all civil litigation. The appeal of the criminal
conviction could take two years.
"I am not going to stay civil discovery with respect to Mr.
Nacchio," Shaffer said during a hearing at the federal
courthouse in Denver. "I would expect this case to move
If Nacchio's attorneys file a formal motion to delay discovery,
the stay may be continued pending a ruling on that motion,
Shaffer said. Silverstein said he intends to file the formal
Nacchio, 57, was not at the hearing.
The SEC alleges in the suit filed in March 2005 that former
Qwest officials fraudulently boosted revenue by $3 billion from
1999 to 2002. Denver-based Qwest later restated much of that
Other defendants in the case are former Qwest president Afshin
Mohebbi, former chief financial officer Robert Woodruff and
former accountants Frank Noyes and James Kozlowski. The SEC has
settled with several other former executives who were also sued,
including former chief financial officer Robin Szeliga.
Szeliga's settlement still requires approval from the judge.
The SEC wants the former officials to repay stock-sale profits
and, in some cases, salaries earned from 1999 to 2002. They are
seeking $216 million from Nacchio.
Shaffer gave the SEC until May 11 to serve written discovery on
Nacchio. Shaffer gave Nacchio's attorneys until May 31 to serve
written discovery on other parties in the case.
Nacchio is scheduled to be sentenced in the criminal case July
27. He faces up to 10 years in prison and a $1 million fine on
each of the 19 counts of illegal insider trading. The
government filed a motion Thursday seeking forfeiture of the $52
million Nacchio grossed on his illegal insider trades.
Nacchio joined Qwest in 1997 and was ousted by the board of
directors in June 2002. He oversaw the company's tremendous
growth as well as its near collapse into bankruptcy.
Staff writer Andy Vuong can be reached at 303-954-1209 or
Joe Nacchio's attorneys filed a motion Thursday for disclosure
of responses to jury questionnaires, in connection with the
anticipated appeal of his criminal insider- trading conviction
and request for a new trial. The former Qwest chief executive's
attorneys want responses to questionnaires that were mailed to
1,000 prospective jurors to be "immediately provided to counsel
so that they can be analyzed as part of our motion seeking a new
They said they need the responses to determine how the field was
narrowed to 78, which was the number of potential jurors who
showed up for jury selection.
"To the extent that potential jurors' answers to the
questionnaire did not demonstrate potential bias justifying
automatic excusal, the court's pre-trial method for winnowing
the venire from 1,000 to 78 may be (an) error that warrants the
grant of a new trial," the filing states.