The Association of U S West Retirees



Will we ever see "I-Spy"defense?
By Al Lewis, Staff Writer
Denver Post
Tuesday, July 10, 2007

Let's throw Joe Nacchio in prison before we hear his defense.

The former Qwest CEO, convicted in April on 19 counts of illegal insider trading, will be sentenced July 27.  Prosecutors on Friday recommended he serve seven years and three months and pay $19 million in fines, plus they want $52 million back from his illicit trades.

That's not enough for some people.

"If the feds really want to stop this, they should hang him," someone calling themselves Steve wrote on my blog over the weekend.  "Many U S West employees would be happy to pull lever."

I know several of them myself.  Many lost fortunes and livelihoods when Qwest crashed to $1 a share from more than $60.  Many blame Nacchio, exclusively, for every penny of this decline.

Too bad we never heard much of Nacchio's defense.  Nacchio declined to testify and hardly called any witnesses.  A trial that was expected to take eight weeks took less than four as Nacchio's accomplished legal team rolled over and played dead.

Why didn't Team Nacchio fight?

One explanation is that Nacchio's attorneys may have figured they didn't have to fight.  The prosecution's case was largely circumstantial.  And, in my estimation, prosecutors really didn't connect all the dots until their closing and rebuttal arguments anyway.

A second explanation is that Nacchio really didn't have a viable defense -- but you would think any legal team that bills by the million can come up with something.

A third explanation is that the government hobbled Nacchio's defense before it could be presented to a jury.

In pretrial court documents, Nacchio had promised what I call the "I-Spy" defense.  Nacchio's lawyers argued that Qwest was due to receive top-secret government contracts that only Nacchio and a handful of others knew about.  With this secret revenue, Qwest would have made its projections,

Nacchio would not have gotten into all this trouble with his stock options and America would be safer.

But this revenue never came, possibly because Nacchio refused to bend over for the U.S. National Security Agency when it demanded phone records of customers after the Sept. 11 attacks.  Nacchio, as has been widely reported, was perhaps the only telecom executive in America who questioned this wholesale dump of private information, and now he's paying the price for his disobedience -- or so the defense goes.

Team Nacchio, however, never made this I-Spy defense to the jury.  Maybe it was a red herring.  Or maybe he really was a spy -- and they silenced him.

Who are they?  Well, you know, them.  Various government types.

Info slow in coming

Somebody in the government is supposed to redact and release documents and transcripts from closed pretrial proceedings in Nacchio's case that are subject to the Classified Information Procedures Act.  I wish I could tell you who -- but then maybe they'd have to kill me.

Judge Edward Nottingham has said these documents should be made public, but nondescript government agencies are supposed to have a chance to redact them first, removing sensitive security information.  So far, very little of this material is available as these secret bureaucrats dawdle, so I have no way of really knowing whether Nacchio's I-Spy defense was viable.

"The classified information at issue is relevant, admissible and can be used at trial, subject to further proceedings under CIPA," Nottingham ruled in one of the few redacted orders made public.

So why didn't Nacchio present it?

Now, Nacchio is headed for prison.  My best guess is that on July 27, Nottingham will give him 30 to 45 days to get his affairs in order and then report.  I don't believe this judge will allow such a high-profile defendant to be free pending appeal, though anything is possible.  Meantime, Nacchio isn't likely to earn any points through contrition, since it's clear he believes in his innocence.

No-holds-barred assault

Nacchio is preparing a no-holds-barred assault on the government's victory.  Marshaling deep financial resources, he recently added Maureen Mahoney, a seasoned Washington, D.C., appellate and Supreme Court lawyer, to his legal team.

I expect Team Nacchio will make all of the garden-variety challenges, including whether Denver was the proper venue, given its lynch-mob mentality, whether the judge gave proper jury instructions and whether the judge erred in this ruling or that. The court will hear it all.

I don't think we've seen the end of the I-Spy defense, either.

Can the government on one hand prosecute a defendant and on the other take away his defense?  And is this what happened to Nacchio?

Right now, we have no way of knowing.  We never heard Nacchio's defense.  It's classified.  Anybody got a rope?

Al Lewis' column appears Sundays, Tuesdays and Fridays. Respond to him, 303-954-1967 or