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Nacchio defense fees an issue as Washington lawyer joins his team
By Andy Vuong, Staff Writer
Denver Post
Thursday, May 24, 2007

Five years removed from being Qwest's chief executive, Joe Nacchio's name still comes up during the Denver company's annual stockholders meeting.

A Qwest shareholder asked Wednesday whether the company would try to recover the money it has advanced to pay for Nacchio's legal fees -- a tab that continues to rise as Nacchio has reported hired a top Washington lawyer to appeal his conviction on 19 counts of illegal insider trading.

Qwest chief executive Dick Notebaert said the company is reviewing "what is possible and what the correct path is."

He said Qwest's lawyers in Denver and Delaware, where the company is incorporated, are analyzing the matter to see what the company can recover.

"It's extremely complex," Notebaert said.

Nacchio has added Maureen Mahoney, a partner in the Washington office of international law firm Latham & Watkins, to his already high-profile defense team, The Wall Street Journal reported late Wednesday on its website.

Mahoney has worked on major appellate cases before, representing now-defunct accounting firm Arthur Andersen in its appeal of an obstruction-of-justice conviction.  The Supreme Court overturned the conviction in 2005.

Mahoney's fees will be part of a tab that experts have said could reach $75 million for criminal and civil proceedings.  Nacchio's defense includes the services of decorated New Jersey lawyer Herbert Stern, whose previous work as a federal judge on an airplane-hijacking case in Berlin was turned into a movie starring Martin Sheen.

Qwest has said its corporate bylaws require the company to advance legal fees for current and former directors and officers involved in litigation because of their work with the company.

Qwest hasn't disclosed how much of Nacchio's legal tab has been paid by insurance and how much has been paid by the company and, thus, shareholders.

Asked whether shareholders will be given more details about the fees once the process is completed, Notebaert said, "I would think so."

Nacchio joined Qwest in 1997 and was ousted in June 2002.  Though he led the company through tremendous growth, it nearly crashed into bankruptcy at the end of his tenure amid the tech downturn and news of accounting irregularities.

Nacchio still faces a civil fraud lawsuit filed by the Securities and Exchange Commission and a number of shareholder lawsuits.  The SEC alleges Nacchio and other former Qwest executives fraudulently boosted Qwest's revenue by $3 billion from 1999 to 2002.

Staff writer Andy Vuong can be reached at 303-954-1209 or