The Association of U S West Retirees



Nacchio facing 7 years-plus, if prosecutors have their way
Defense argues for leniency, based on 'prior good works'
By Sara Burnett
Rocky Mountain News
Saturday, July 7, 2007

Former Qwest CEO Joe Nacchio should serve more than seven years in prison and pay a $19 million fine for his conviction on 19 counts of insider trading, prosecutors argued in court documents filed Friday.  The seven-year, three-month prison term is the maximum allowed under federal sentencing guidelines, and is necessary to deter other corporate insiders from committing similar crimes, prosecutors said.

"Any lesser sentence would send a message of tolerance of the egregious behavior proven at trial," the document states.

Prosecutors also are seeking forfeiture of the $52 million they say Nacchio made off the illegal stock sales.

Nacchio's attorneys, meanwhile, filed documents arguing the former CEO should have to forfeit only $1.8 million.  That's the amount, minus costs and taxes, that a financial analyst has determined was "gain attributable to the material inside information," they said.  His attorneys also asked U.S. District Judge Edward Nottingham to consider a lesser prison sentence because of Nacchio's "prior good works" and because his time in prison could have a negative impact on the health and possibly "the life expectancy" of two of his family members.

The document does not name the family members, but prosecutors identified one in their court filing as Nacchio's oldest son, who defense attorneys said at trial had attempted suicide while Nacchio was working for Qwest.

Nacchio is scheduled to be sentenced July 27 in federal court in Denver.

He was convicted in April of illegally selling Qwest stock in April and May 2001.  At the time, Nacchio knew the company couldn't meet aggressive revenue goals.  He should have shared that "insider" information with shareholders and other members of the public before he sold his own stock, the jury found.

In the document filed Friday, prosecutors called Nacchio's 19 separate stock sales in April and May 2001 "a calculated scheme to unload as much stock as possible while misleading the markets," and said he was business-savvy enough to know better.

"No one knew better than the defendant how important the information was that he refused to share with investors," prosecutors stated.

They also said Nacchio's sentence should be more severe than that of the only other former Qwest employee convicted of insider trading, Robin Szeliga, the former chief financial officer.

Szeliga, who testified against Nacchio, was sentenced to two years of probation and six months of home detention and given a $250,000 fine.  She also was ordered to repay the $125,000 she netted from her illegal sales.

Prosecutors also rejected Nacchio's arguments for a lesser prison sentence, saying the former CEO's wife has the time and resources to care for the other family members in his absence, and Nacchio's "prior good works," or charitable work, are not out of the ordinary for a corporate executive.

Nottingham will make the final decision on sentencing. or 303-954-5343,2777,DRMN_23916_5619161,00.html