The Association of U S West Retirees



US prosecutors attack Nacchio's bid for new trial
By Catherine Tsai, AP Business Writer
Denver Post
Tuesday, March 7, 2009

DENVER Federal prosecutors have asked a judge to deny former Qwest CEO Joseph Nacchio's motion for a new trial on insider trading charges, saying that new evidence Nacchio says he has uncovered isn't really new.  Nacchio, who was convicted on 19 counts but acquitted on 23 counts in 2007, argues that testimony from former Chief Financial Officer Robin Szeliga in a pending civil case against him could lead to acquittal.

Prosecutors argued in a filing late Monday in U.S. District Court that to win a new trial, Nacchio would have to show Szeliga's testimony is new, could not have been obtained earlier, doesn't rehash earlier testimony, is material to his case and would probably lead to acquittal.

"Defendant Nacchio's motion does not satisfy all of these elements.  It does not even come close," prosecutors wrote.

Prosecutors alleged Nacchio sold $52 million in Qwest Communications International Inc. stock in 2001 knowing the company's future earnings were substantially at risk but did not tell investors.

Nacchio's lead appeals attorney, Maureen Mahoney, was out of the office Tuesday and was not available for comment.  But she has argued that the magnitude of risk presented to jurors at trial was wrong.

Szeliga testified at Nacchio's trial about that risk.  She also was deposed in February in a civil case filed by the Securities and Exchange Commission.  The SEC alleges Nacchio and other former Qwest employees coordinated a financial fraud that allowed Qwest to improperly report about $3 billion in revenue.

Nacchio's attorneys argue that Szeliga's new testimony indicates that when she warned Nacchio that Qwest might miss a 2001 revenue target by almost $1 billion, she was referring to a higher internal sales goal, not a lower target that Nacchio stated publicly.

Prosecutors wrote in the court filing that Nacchio's attorneys were aware of that ambiguity at trial.  They also said Szeliga did not recant her trial testimony in the deposition testimony.

Her testimony wasn't the only evidence prosecutors collected.  In early 2001, other executives recommended that Qwest disclose more about its revenues, but Nacchio responded with disdain, prosecutors wrote.

Szeliga sold stock in April 2001 and later pleaded guilty to a single count of insider trading based on material information that investors didn't know.

Nacchio also is appealing his conviction to the U.S. Supreme Court.  That appeal raised questions about the fairness of the trial judge, whether jury instructions were proper, whether a defense expert was properly barred from testifying, and what should be considered material information that companies need to disclose.

Nacchio remains free.  He had been ordered to report to a Pennsylvania prison to begin a six-year term last month, but a judge stayed that order until she decides whether he can be free on bail until the Supreme Court considers his appeal.

Nacchio also was ordered to pay $71 million in fines and forfeitures.

A former AT&T executive, Nacchio moved to Qwest after being passed over for the top job at AT&T.  He resigned from Qwest in June 2002, about two months after Qwest disclosed that the SEC had opened a formal inquiry into its accounting.

Nacchio was one of several corporate executives convicted as part of a government push to punish white-collar executives stemming from major accounting fraud at companies like Enron and Worldcom.

Qwest is the primary telephone provider in 14 mostly Western states.