Cooperation key in prosecution
By Tom McGhee, Staff Writer
Tuesday, December 20, 2005
Even if prosecutors have a mountain of documents that
indicate former Qwest CEO Joe Nacchio broke the law they
will likely turn to those who worked closely with him to
make their case stick.
Accusations of insider trading and other counts that Nacchio
faces can be confusing to a jury if there is no witness to
explain what was happening at the time an e-mail, memo,
invoice or other document was drafted.
"It is hard to make a case totally on the documents ... and
a witness, particularly a witness who had actual involvement
in the alleged crime, has to be backed up by documents to be
completely credible," said John Walsh, a former federal
prosecutor in private practice with Hill & Robbins in
Almost certain to take the stand in any trial is former
Qwest chief financial officer Robin Szeliga, who has pleaded
guilty to insider trading and agreed to cooperate with the
The Justice Department's indictment against Nacchio focuses
on insider trading and disclosure issues in 2001 during the
time Szeliga oversaw Qwest finances.
"The CFO should be central to the events. If the CFO
doesn't know what is going in a company's finances, who on
God's green earth would," said Carr Conway, director of
forensic accounting at the Dickerson Group in Lakewood.
Sources close to the case have said Afshin Mohebbi, who was
Nacchio's chief operating officer, also is likely to testify
for the prosecution, and may have been granted immunity for
If Mohebbi has escaped prosecution in return for taking the
stand, he will be a star witness, said Tony Leffert, a
former federal prosecutor and attorney with Robinson, Waters
& O'Dorisio in Denver, who isn't involved in the case.
"For someone in his position to not be charged or plead
guilty to any crime would indicate that he probably has
significant evidence about others," said Leffert.
Damaging information doesn't have to come from a defendant's
inner circle. Mid-level support staff, or even a secretary,
can sometimes provide it.
The most effective witnesses are those who have had direct
contact and direct conversations with a defendant.
One of Nacchio's closest co-workers was former Qwest general
counsel Drake Tempest, who reportedly has testified in front
of the grand jury against Nacchio. Tempest joined Qwest in
1998 from the New York law firm of O'Melveny and Meyers. He
returned to the firm in 2002 after Nacchio was ousted by the
Neither Nacchio nor Tempest ever settled in Colorado and the
two frequently traveled together on Qwest's corporate jet as
they commuted to and from their homes on the East Coast. As
general counsel, Tempest also would have had knowledge of
Qwest's inner workings.
Prosecutors wrung an agreement to cooperate from former
Qwest senior vice president Thomas Hall, and Grant Graham,
the former chief financial officer of the company's global
business unit. The two men were accused of participating in
a scheme to improperly inflate Qwest's revenues by $34
million in 2001.
Hall pleaded guilty to a single misdemeanor count of
falsifying documents after a jury deadlocked on a broader
set of fraud charges. In exchange, prosecutors dropped
three counts of wire fraud and one count of securities
In the same case, Graham pleaded guilty to one felony count
of being an accessory after the fact to wire fraud with
reckless indifference. His plea deal calls for a maximum of
one year of probation and a $5,000 fine.
Though they may have cooperated in the DOJ investigation,
whether they take the stand may depend on how much they know
about the activities that led to the indictment, said
Walsh. "The most effective witness is the one who had
direct contact and direct conversations with whoever the
The DOJ has indicted one other former Qwest vice president,
Marc Weisberg, on allegations that he secretly took $3
million worth of stock from Qwest vendors for himself and
others. Weisberg has pleaded not guilty and legal experts
have speculated that investigators are pressuring Weisberg
to provide information that would help them prosecute
Nacchio. Prosecutors have said the Weisberg case was an
offshoot of the larger Qwest investigation and the two cases
aren't closely related in substance.
A number of former Qwest executives also have settled with
the Securities and Exchange Commission after they were named
in a civil accounting fraud case. The SEC said their
actions allowed Qwest to improperly report approximately $3
billion in revenue that helped clear the way for its 2000
acquisition of U S West.
They are: Greg Casey, former executive vice president of
wholesale market; former pricing manager Roger B. Hoaglund;
former senior vice president of finance William Eveleth;
former controllers Mark A. Schumacher and Bryan K. Treadway.
Each has agreed to cooperate with the SEC in its
investigation of the Qwest case.
But legal experts say that doesn't guarantee they have a
similar agreement with the Department of Justice that would
make them dependable witnesses.
"You are going to have some grudging cooperation from those
folks who have already been through the mill but they are
not going to be enthusiastic about it," said Conway.
The SEC has charged two other former executives, James
Kozlowski and Frank Noyes, both of whom were accountants, in
the same civil accounting fraud case. The SEC claims the
two failed to disclose sales transactions that should have
been included in Qwest's financials.
Both deny guilt and have requested the judge dismiss the
Kevin Evans, Kozlowski's lawyer, said unless prosecutors
include charges about those transactions, his client is
unlikely to be a witness.
Staff writer Tom McGhee can be reached at (303)820-1671 or