Nacchio gets 6 years in prison, must pay $71 million; bail
By Jeff Smith
Rocky Mountain News
Friday, July 27, 2007
Federal Judge Edward Nottingham today sentenced former Qwest CEO
Joe Nacchio to six years in prison for his conviction in the
largest insider-trading case in U.S. history. Nacchio, convicted
of 19 counts of insider trading, also was fined $19 million and
ordered to forfeit within 15 days the $52 million he made from
illegal stock sales.
Nacchio's motion for bail pending appeal was denied, and he was
given 15 days to report to prison. He asked to speak to the
court after sentence was pronounced, but Nottingham would not
allow it in a dramatic conclusion to the hearing.
Nacchio was whisked away from the courthouse in a white Chevy
Suburban about 20 minutes after the hearing ended. He did not
speak to reporters.
Nottingham said Nacchio should serve his sentence at the
Schuylkill Federal Correctional Institution in Minersville, Pa.,
which houses both a medium-security facility and a
minimum-security camp. Nacchio had requested that if sentenced
he be housed in the camp at Schuylkill, but the Federal Bureau
of Prisons will make the final determination on where he is
The Schuylkill prison is about 46 miles north of Harrisburg,
Pa., and 175 miles north of Washington, D.C.
Nacchio's prison time would be followed by two years of
A jury in Denver found Nacchio guilty in April of insider
trading for stock sales he made in April and May 2001.
After his sentence was announced, Nacchio stood up, pointed to
his appellate attorney and said "I'm going to say something."
He walked toward the judge's bench, and said "I'm going to
address the court. I'm the defendant. I promise it will be
Nottingham cut Nacchio off, saying he had the opportunity to
make a statement earlier. He then ended the hearing.
Nacchio was consoled by his youngest son, Michael, and his wife,
Anne Esker, after sentencing.
Nottingham said Nacchio committed "crimes of overarching greed"
when he profited from sales of Qwest stock even as he knew the
company was in financial trouble. "He took this job ... because
he couldn’t turn it down.
"He couldn’t turn it down because it was too much money."
Troy Eid, U.S. Attorney for Colorado, said "The sentence proves
no one, no matter how wealthy, is above the law."
"This is what the American criminal justice system is all
about," Eid said. "Justice worked here."
Cliff Stricklin, lead prosecutor for the government, said the
top priority for the government is getting the money Nacchio was
ordered to forfeit into the victims' hands. The $52 million will
be held in a trust pending Nacchio's appeal of his conviction.
How the cash will be distributed to Qwest shareholders who lost
money has not been determined, but it could be distributed
through a fund already set up by the SEC.
In his sentencing statement, Nottingham said some have suggested
that Nacchio recently has engaged in "borderline alcohol abuse."
But he said Nacchio has been under stress and doesn't think
special conditions should be attached to address the issue.
Nottingham said Nacchio is to be commended for his acts of
charity to his family and others, but said he didn't find them
to be extraordinary. He said charitable works are expected of
someone with so much wealth.
The judge also said there's no question Nacchio's oldest son
David is ill and that Nacchio has been a wonderful father. But
he noted that Nacchio also deprived his son when he decided to
take the job at Qwest in Colorado, though he lived in New
Nacchio's legal team, led by Herbert Stern, had argued their
client should avoid jail time because of his son's health and
because of health issues involving Nacchio's elderly mother.
"I bet you anything" that Nacchio wishes he walked away from
Qwest in early 2001, Nottingham said, but the fact was that he
didn't, instead negotiating a new contract.
Stricklin this morning said the government asked for a sentence
of seven years and three months, on the "high end" of the
sentencing range, and said it considered seeking an even higher
"This is not for a pound of flesh or retribution," Stricklin
said, but noted the seriousness of the offense, Nacchio's
responsibilities as leader of Qwest, and the "devastating
consequences" when the company lost credibility.
"Joe Nacchio was Qwest," Strickin said.
Prosecutor Colleen Conry, arguing against leniency in
sentencing, said there are other capable people to care for
David Nacchio, who has emotional issues. David Nacchio has a
"wonderful mother trained in these issues" and a "top-notch
Joe Nacchio was emotional when his sentence was read, wiping
tears with a handkerchief. He had cried earlier during
discussions about his family.
Stern argued earlier in the morning that there was no "rational"
basis to calculate that the former CEO's stock gains totaled $52
million. That was the gross proceeds from his illegal stock
sales in April and May 2001.
At most, Stern said, Nacchio's gains were $28 million after
option costs and taxes. Nottingham accepted that number, which
was used in determining sentence.