Re-sentence for Nacchio not unusual
A ruling that might shorten his jail term isn't rare with
financial crime, some say.
By Andy Vuong
Wednesday, August 5, 2009
A ruling last week that could shorten Joe Nacchio's six-year
prison term for insider trading surprised many retirees and
shareholders who blame the former Qwest chief executive for the
company's financial meltdown earlier this decade.
But legal experts say re-sentencings in complex white-collar
cases are not uncommon because prison terms are tied to the
amount of money determined to have been lost or gained from the
crime — often a subjective figure.
And the ruling from a three-judge panel of the 10th Circuit
Court of Appeals may start another set of legal battles,
including a renewed request to allow the imprisoned Nacchio to
be free on bail while the sentence is sorted out.
"It's very, very common in complicated cases for there to be
significant litigation and disagreement about calculating the
loss," said former federal prosecutor Rick Kornfeld.
Last year, Adelphia Communications founder John Rigas had his
15-year sentence for securities fraud and other charges trimmed
to 12 years. His son, Timothy Rigas, had his cut from 20
years to 17 years.
In January, an appeals court ordered a resentencing for former
Enron CEO Jeff Skilling, who is serving a 24-year term for fraud
and other charges at a prison in
Littleton. The resentencing has
been postponed pending the outcome of Skilling's motion for a
In Nacchio's case, "there are lots of debatable economic issues
that kind of course around the sentencing," said Douglas Berman,
a law professor at Ohio
University who specializes
in sentencing law.
Nacchio was convicted in 2007 on charges that he illegally sold
$52 million in Qwest stock in early 2001 based on inside
information. The trial judge sentenced Nacchio to six
years in prison based on a gain of $28 million — the amount he
made from the stock sales after taxes and fees. The
government argued taxes should be included, taking his gain to
more than $44 million for a maximum term of seven years, three
Nacchio contended that his actual gain for sentencing purposes
was $1.8 million — the impact on Qwest's stock price when the
inside information was publicly disclosed months after he made
his stock sales. The 10th Circuit appeared to agree with
this methodology, stating that Nacchio's sentence "should be
linked to the gain actually resulting from the offense, not to
gain attributable to legitimate price appreciation and the
underlying inherent value of the Qwest shares."
The appeals panel didn't suggest an amount for the gain in
ordering a new sentence.
If the government is not successful in challenging the panel's
ruling, Nacchio's sentencing would start anew in U.S. District
Court in Denver, likely meaning a fresh round of filings and
hearings, said Peter Henning, a professor of law at Wayne State
could be asked to testify about the gain.
Andy Vuong: 303-954-1209 or