The Association of U S West Retirees



Allegations against Spitzer don't affect Nacchio case, experts say
By Jeff Smith
Rocky Mountain News
Wednesday, March 12, 2008

It's been a wild week in the continuing saga of former Qwest CEO Joe Nacchio.  And that's without any new development in his criminal or civil cases.

First, 9News reported last week that Chief Federal Judge Edward Nottingham, who presided over Nacchio's insider-trading criminal trial, may have been a customer of an escort service.

Now, New York Governor and former prosecutor Eliot Spitzer, who once sued Nacchio in connection with stock sales, allegedly was a client of a pricey escort service.

"You can't help but note the irony that two of the people most responsible for Joe Nacchio's justice-system problems are almost simultaneously in the news with alleged ethical problems of their own," former Denver prosecutor Craig Silverman said Tuesday.  "Somewhere in New Jersey, a man (Nacchio) is probably smiling."

But as Silverman and other experts point out, none of the past week's events detract from the legal actions against Nacchio.

A jury convicted Nacchio of insider-trading charges.  The case was brought by federal prosecutors who haven't been implicated in any scandal.  And many experts praised Nottingham's handling of the case, although some of his decisions are now being scrutinized by a three-judge appellate panel.

Spitzer became famous for his zealous attacks on Wall Street as New York's attorney general.  The cases ensnarled prominent Colorado executives and companies such as Nacchio, Qwest founder Phil Anschutz, Invesco and Janus.

Spitzer charged Nacchio and Anschutz with improperly profiting from hot initial public offering stocks in exchange for steering investment banking business to Salomon Bros.

In 2003, Anschutz agreed to donate $4.4 million to settle the allegations, while maintaining that he did nothing improper.  Anschutz spokesman Jim Monaghan declined to comment about Spitzer on Tuesday.

Nacchio donated $400,000 to New York law schools in late 2003 to settle his IPO case.  Spitzer led the charge against Invesco and Janus for alleged abusive mutual fund trading practices.  In 2004, Invesco paid $451.5 million and Janus paid $226.2 million to settle allegations, which Colorado and federal regulators also joined in.