The Association of U S West Retirees



Nacchio Losses Bid to Reverse Conviction
By Al Lewis
The Wall Street Journal
Wednesday, February 25, 2009

A U.S. appeals court upheld the insider trading conviction of former Qwest Communications International Inc. Chief Executive Joseph Nacchio, reinstating his prison sentence and revoking his release on bond.

The 10th Circuit Court of Appeals in Denver affirmed Mr. Nacchio's April 2007 conviction on 19 counts of insider trading for transactions that occurred as far back as 2001.

Mr. Nacchio, who was sentenced to six years in prison, has remained free on bond during his appeals, but not for much longer.  "The unsecured bond executed by Mr. Nacchio in the district court is exonerated, and the stay of Mr. Nacchio's sentence of imprisonment is hereby lifted," the court wrote.

In March 2008, the 10th Circuit ordered a new trial for Mr. Nacchio after finding that the trial judge improperly excluded expert testimony.  But in September, a broader panel of appellate judges reviewed that decision in a "en banc" hearing, an event so rare that lawyers packed the gallery just to see it.

Wednesday's decision overturns the initial decision by the appellate court.

Mr. Nacchio's attorney, Maureen Mahoney, is preparing a response she will release to reporters later Wednesday.  In the past, Mr. Nacchio's legal team has indicated it will fight the case all the way to the U.S. Supreme Court.  It will likely file papers asking for another stay of Mr. Nacchio's prison sentence, pending further appeal, before he is ordered to report.

After Mr. Nacchio was fired from the phone company in 2002, Qwest restated its books, erasing $2.5 billion in improperly booked revenue from 2000 to 2002.

Qwest's stock, which once traded for more than $60, collapsed to nearly $1 a
share.  Qwest averted bankruptcy, but its shares still trade for about $3.50.

Mr. Nacchio never got to put on much of his defense during his trial.  He called
only one expert witness:  Daniel Fischel, a Northwestern University law
professor, who had testified on behalf of savings-and-loan kingpin Charles
Keating as well as Enron's Kenneth Lay and Jeffrey Skilling.

Mr. Fischel was to address whether the information Mr. Nacchio had as he traded his stock fit the legal standard of "material."  The appellate court ruled Mr. Fischel's testimony was improperly excluded, but then reversed itself on Wednesday.

Mr. Nacchio's initial success in appealing his case has been a black eye for
federal prosecutors.

"It's a tremendous day for the United States government," said former U.S.
District Attorney Troy Eid, who prosecuted the case and then became partner at
Greenberg Traurig.  "I couldn't be happier."