judge rules in secret
By Sandy Shore, The Associated Press
Thursday, October 26, 2006
A federal judge has issued a secret ruling about the relevance
of classified government documents that former Qwest Chief
Executive Officer Joe Nacchio wants to use in his defense
against insider trading charges.
U.S. District Judge Edward Nottingham's ruling came about two
weeks after he met behind closed doors with prosecutors and
Nacchio's attorneys to discuss the classified information.
In his memorandum and order, which were filed with the court
late Tuesday, Nottingham said he explained his decision
regarding the documents but the bulk of it, 25 pages, was sealed
under the Classified Information Procedures Act.
A spokesman for the U.S. attorney's office declined comment
today. Nacchio's attorneys have said they will not comment on
the case outside the courtroom.
Nacchio is charged with 42 counts of insider trading, accused of
selling stock in 2001 based on inside knowledge that Qwest
Communications International Inc. would be unable to meet
Each count against Nacchio carries a penalty of up to 10 years
in prison and a $1 million fine. The trial is set for March 19
and is expected to last about 30 days.
At issue is whether the classified information will help explain
what Nacchio might have known at the time the trades occurred.
The defense has said Nacchio was aware of classified government
contracts awarded to Qwest and of plans for future government
business dealings with the Denver-based company.
Qwest, the primary phone service provider in 14 mostly Western
states, reported total revenue of $19.6 billion in 2001, the
year of the trades in question. Of that, $322 million was
attributed to federal contracts, and less than half of that came
from classified contracts, according to court filings.
Nacchio also is one of several former Qwest executives accused
by the Securities and Exchange Commission in a civil case
alleging they orchestrated a financial fraud that forced the
company to restate billions of dollars in revenue.
The Classified Information Procedures Act was enacted several
decades ago to counter a strategy used by defendants charged
with spying who would threaten to expose national secrets unless
the charges were dropped.
It allows the attorneys and judges to review such information
behind closed doors to determine if it is significant enough to
be included at trial.