The Association of U S West Retirees



Hearing Postponed in Case Against Former Qwest CEO
By Shawn Young
The Wall Street Journal
Saturday, July 8, 2006

The judge overseeing the criminal insider trading case against former Qwest Communications International Inc. Chief Executive Joseph Nacchio delayed an important hearing in the case because of the complex logistics involved in reviewing classified material introduced by the defense.

Saying he needed extra time for his staff to get the security clearances and facilities that are legally required for handling the classified materials, Denver-based U.S. District Judge Edward Nottingham on Friday postponed the hearing to August 25 from July 14.  He is scheduled to rule on a variety of motions from both sides, including a defense motion to dismiss the case.

Mr. Nacchio is fighting charges that he sold $101 million in stock in early 2001 with insider knowledge that the Denver-based phone company was about to falter.  In court filings, his attorneys have said he was optimistic about the company's prospects because, based on classified information, he thought Qwest was poised to win important contracts related to national security.

Prosecutors have argued that the national security aspect of the defense is a smokescreen with no relevance to the charges.  Even if the company had won the government contracts, they wouldn't have solved the underlying problems that Mr. Nacchio knew the company faced, prosecutors have said in court filings.

Mr. Nacchio was indicted late last year on 42 counts of insider trading that carry a maximum penalty of 10 years in prison each.  Qwest eventually restated $2.5 billion in revenue and $2.2 billion in earnings for 2000 and 2001.  Mr. Nacchio is not accused of falsifying the books.  In addition to the criminal charges, Mr. Nacchio faces civil fraud charges in a suit brought by the Securities and Exchange Commission.

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