Ex-Qwest CEO wants legal fee payments to be guaranteed
May 25, 2007
DENVER- Former Qwest Communications chief executive Joe Nacchio, convicted last month of insider trading, has asked a judge to guarantee the telecommunications company will continue to pay his legal fees.
In a complaint filed Friday in a Delaware court, Nacchio's attorneys said Qwest Communications International Inc. has hired an outside lawyer to determine what Qwest's obligations are for paying Nacchio's legal expenses.
"The company has impermissibly cut off and declined to reaffirm plaintiff's (Nacchio's) right to mandatory advancements for covered proceedings," attorney Kevin Abrams wrote in the complaint.
Abrams asked the court to require Qwest to continue paying all of Nacchio's legal expenses.
Qwest spokesman Nick Sweers said Friday the company believes the complaint is without merit. "We will defend ourselves vigorously," he said.
Sweers declined to say how much the company has paid to date for Nacchio's defense.
Nacchio, who resigned from Qwest in June 2002, was accused of illegally selling $101 million in stock from January to May 2001 based on inside information that Qwest was at financial risk. Prosecutors argued that he didn't tell investors at the time about the risks Qwest faced.
Nacchio was convicted April 19 of 19 counts of insider trading involving $52 million in stock transactions in April and May 2001. The jury acquitted him of the remaining 23 counts.
Sentencing is set July 27. Each count carries a sentence of up to 10 years in prison and a $1 million fine and legal analysts have speculated Nacchio will get a prison term of eight to 10 years. His attorneys plan to appeal.
The complaint detailing the fee dispute was filed in the Chancery Court in Delaware, where Qwest is incorporated, although its headquarters is in Denver.
Nacchio's attorneys said he is entitled to reimbursement for legal expenses under terms of his 2002 resignation agreement, and the company has been advancing payment to his criminal defense team since early 2006.
However, after Nacchio was convicted, his attorneys were advised they needed to discuss legal fees with Qwest's general counsel, Richard Baer, who declined to say if the company would pay the April bill, the complaint said.
Shareholders and retirees of Denver-based Qwest previously and repeatedly have raised the issue of Nacchio's legal fees, but the company has declined to provide details.
Nacchio is also named in several civil lawsuits stemming from an accounting scandal that forced Qwest to restate $2.2 billion in revenue.
Securities and Exchange Commission has alleged Nacchio and
several other one-time executives worked together to engineer a
civil fraud that led to the revenue restatement. In addition,
Nacchio is a party in litigation in Arizona, New Jersey, New
York and the Netherlands.