the jury heard and saw
By Rocky Mountain News
Friday, May 11, 2007
Prosecutors on Thursday released hundreds of documents, as well
as video and audio clips, from the trial of former Qwest CEO Joe
Nacchio, who was convicted last month of 19 counts of insider
trading. The evidence -- some key pieces of which are included
here -- provides a glimpse of what jurors heard and saw during
the weeks-long trial at the federal courthouse in Denver.
Prosecutors accused Nacchio of selling $100.8 million in Qwest
stock between January and May 2001 while he had "insider"
information that the company was headed for trouble. The CEO
should have shared that information with investors before he
sold, the government said.
Jurors agreed, at least in regard to the shares Nacchio sold in
April and May. By that time, it should have been clear to the
experienced CEO that the company couldn't meet its aggressive
goals, jurors said after reaching their verdict.
Nacchio is scheduled to be sentenced in federal court on July
27. He faces up to 10 years or more in prison, as well as fines
of $1 million per count and forfeiture of $52 million.
Here is a look at some of the information jurors took with them
to the jury room:
July 1999: Nacchio, who joined Qwest from AT&T, and
the CEO of U S West announce the two companies will merge. The
investor script is titled "Project America."
July 10, 2000: Days after the merger is complete,
Nacchio speaks to Qwest employees at a leadership conference,
telling them the company must "grow or die."
Sept. 2000: An optimistic Joe Nacchio announces Qwest
is raising its revenue targets for 2000 and 2001.
November and December 2000: Chief Operating Officer
Afshin Mohebbi, concerned the targets are two high, writes two
memos to Nacchio. He calls the goals a "huge stretch." He and
other witnesses told jurors the company was relying too much on
onetime sales of space on its fiberoptic network to make their
numbers, and that the sales were not sustainable.
Dec. 2000: Nacchios show assets of $547 million.
Dec. 13, 2000: Greg Casey, then the head of Qwests
wholesale division, is outraged after receiving new revenue
goals he thought were impossible to achieve. So he fires off
this succinct e-mail to top managers.
Dec. 21, 2000: Qwest issues a press release
reconfirming its targets. Nacchio explains that the company
isnt experiencing the same troubles as other telcos.
Jan. 5, 2001: At an "All Hands Employee Meeting,"
Nacchio tells staff that the first and second quarters of 2001
are "absolutely critical."
Jan. 10, 2001: Nacchio tells staff during a sales
meeting in Las Vegas that investors are skittish, and predicts
"something big" good or bad will happen by April 2001.
Jan. 18, 2001: Lee Wolfe, head of investor relations,
tells Nacchio in a memo that the investment community is
demanding answers on how Qwest is meeting its numbers while
other telcos are struggling.
Jan. 24, 2001: Qwest issues a press release saying it
had a record fourth quarter 2000.
January to May, 2001: Nacchio sells stock at a pace
faster than ever before. The government's indictment, returned
in 2005, lists the stock sales on pages four and five (document
from the Nacchio court file, not presented at trial).
April 24, 2001: Qwest announces its first quarter
results and reaffirms targets for 2001. Though witnesses
testified at trial that they repeatedly warned Nacchio the
numbers weren't sustainable, the CEO tells investors there was
nothing to sway the company from its goals.
July 2001: Analyst Prashant Khemka sends a memo to
Nacchio, demanding details on how the company is making its
numbers and questioning how many "cockroaches" Qwest has in its
Sept. 10, 2001: Qwest issues a press release
announcing it is lowering guidance for 2001.