Qwest unlikely to recapture Nacchio legal
By Andy Vuong
Wednesday, February 25, 2009
Qwest will have a difficult time recovering any of the millions
of dollars the company shelled out for Joe Nacchio's defense
against insider trading charges, even though the former chief
executive's conviction has been upheld, experts say.
"There are a lot of techniques for putting money where other
people can't find it or get to it legally," said John Toothman,
founder of The Devil's Advocate, a legal fees consulting firm in
Great Falls, Va.
"Getting the money back from (Nacchio), if he had readily
accessible assets, it's tough. Very tough."
In addition to his $1.5 million annual salary, Nacchio profited
$176.5 million from selling Qwest stock from 1999 to 2001. He
received $10.5 million in severance pay when he was ousted in
But much of the money may have been transferred to his wife.
In a court filing seeking to freeze Nacchio's assets after his
conviction on 19 counts of insider trading in 2007, the
government alleged that he transferred $133 million and a house
in New Jersey
to his wife in early 2002 as his legal problems mounted.
In July 2007, Nacchio was sentenced to six years in prison and
ordered to forfeit $52 million in ill-gotten gains and pay $19
million in fines.
Before the sentencing, Nacchio transferred $52 million into
three escrow accounts to be overseen by a federal court as part
of a deal with prosecutors.
The final tally on Nacchio's legal tab will be in the the tens
of millions of dollars, ranking it among the most expensive
white collar criminal defenses, Toothman said.
Former Enron CEO Jeff Skilling, who was convicted of fraud and
conspiracy in 2006, reportedly rang up $65 million in legal
Nacchio was indicted on the criminal insider trading charges in
2005 after a years-long investigation. Pretrial hearings lasted
more than a year and his trial took a month to complete. His
lead trial attorney, Herb Stern, was regarded as one of the top
defense attorneys in the country when he was hired by Nacchio in
As required by its corporate bylaws, Denver-based Qwest advanced
Nacchio's legal fees leading up to and during the trial.
Under an agreement reached with Nacchio after the conviction,
the company paid some of his costs during the appeal. Those
payments were backed by a $6.5 million letter of credit from
Recruited to Qwest in 1997 by founder Philip Anschutz, Nacchio
led the upstart telecommunications company through tremendous
growth, fueled largely by its merger with US West in 2000. Qwest
nearly crashed into bankruptcy at the end of his tenure in 2002
amid the tech downturn and news of questionable accounting. The
company later restated $2.5 billion in revenue booked from 2000
Vuong: 303-954-1209 or