Feds ask court for way to notify Nacchio 'victims'
Statements would be at sentencing
Jeff Smith, Rocky Mountain News
Federal prosecutors on Tuesday requested a process for notifying "victims" so they could exercise their right to be "reasonably heard" at the July 27 sentencing of former Qwest CEO Joe Nacchio.
In a U.S. District Court filing in Denver, prosecutors wrote that Congress requires courts to establish such a procedure, as long as it is reasonable and "does not unduly complicate or prolong the proceedings."
Defense attorney Mark Rufolo argued at a status conference in late May that federal statute prohibits victim statements in such a case.
Prosecutors at that time indicated there likely wouldn't be statements by victims, or people who bought stock at the time Nacchio was making his illegal sales and who later suffered big losses.
Nacchio was found guilty of selling $52 million of Qwest stock between April 26, 2001, and May 29, 2001, on the basis of insider information. He is expected to be sentenced to roughly 10 years in prison.
Testimony by Qwest investors was restricted during Nacchio's trial. In fact, U.S. District Judge Edward Nottingham struck from the record the testimony of one Qwest retiree.
Curtis Kennedy, attorney for the Association of U S West Retirees, said he didn't think Nottingham would be receptive to victim statements at sentencing. "I doubt Nottingham is going to allow too much of that," Kennedy said.
Often, courts will take written statements from victims in lieu of allowing each to speak.
Government prosecutors acknowledged in their filing that the U.S. Sentencing Commission has concluded that "victims and their losses are difficult if not impossible to identify" in insider-trading cases.
For example, it's virtually impossible to know exactly which Qwest shareholders bought the exact 1.33 million shares of stock Nacchio sold during the period in question.
But stockholders who made investment decisions during the insider-trading period and were affected by Nacchio's conduct also may be considered victims, prosecutors wrote. Qwest itself could be considered a victim, prosecutors added.
Prosecutors requested that a number of actions be taken to reasonably notify victims, including putting information on the U.S. attorney's office Web site, sending a letter to a class-action shareholders group, writing letters to Qwest and the Association of U S West Retirees, and publishing notices in daily newspapers.
Nacchio's lead attorney, Herbert Stern, said Tuesday his team would file a response to the government's motion in "due course."
smithje@RockyMountainNews.com or 303-954-5155