The Association of U S West Retirees



What it all means - unfettered Nacchio is a free man for now
By Sara Burnett And Jeff Smith
Rocky Mountain News
Thursday, August 23, 2007

Joe Nacchio won't be reporting to prison anytime soon.  With just weeks to go before the former Qwest CEO was expected to begin serving a six-year prison term, an appellate panel on Wednesday ruled Nacchio may remain free on bail while he appeals his April insider-trading conviction.

The three-judge panel of the 10th Circuit Court of Appeals gave no reason for granting the request by Nacchio's attorneys, issuing an order less than two pages long.

But the decision means the panel decided there is a substantial question of law that, if decided in Nacchio's favor, could reverse his conviction on 19 counts of insider trading.

Nacchio's attorney, Herbert Stern, said he and Nacchio appellate lawyer Maureen Mahoney were "deeply gratified" by the ruling.

"We are looking forward to the appeal," Stern said.

The attorney for a group of retirees who lost money when Qwest stock plummeted under Nacchio's leadership was more skeptical.

The ruling is "an example of the special justice system for the very rich," said Curtis Kennedy, attorney for the Association of U S West Retirees.

Meanwhile, U.S. Attorney for Colorado Troy Eid said his office was disappointed in the decision but pleased the process will move forward quickly.

"We hope the defendant will start serving his sentence as soon as possible," Eid said.

The appellate court ordered the appeal to proceed on an "expedited basis," with oral arguments in December.  The court could then uphold Nacchio's conviction and sentence, or reverse it and send the case back to the District Court for a retrial or new sentencing hearing.

Denver defense attorney Jeralyn Merritt said she doesn't believe Wednesday's decision is a clear sign that Nacchio's conviction will be reversed.

She pointed to other convicted former executives who also were granted bail pending appeal:  WorldCom's Bernie Ebbers and Adelphia's John and Timothy Rigas.  Ebbers and the Rigases are now in prison.

Attorney Scott Robinson agreed, saying the decision of three judges is not definitive.

"While (the panel) gave on one hand, it took away on the other," Robinson said.  "While permitting him to be out on bond, they're giving him a very short leash by expediting the appeal."

John Holcomb, University of Denver associate professor of business ethics and legal studies, said the panel may have given the benefit of the doubt to Mahoney when it issued its ruling.  The Washington, D.C.-based lawyer is a highly regarded appellate attorney who has won all but one of the dozen cases she has argued before the U.S. Supreme Court.  That reputation "could carry some weight" with the appellate judges, Holcomb said.

Prosecutors argued during a five-week trial that Nacchio knew when he sold stock between January and May 2001 that Qwest would not meet aggressive revenue projections.  Nacchio should have shared that information with investors before he sold his stock, prosecutors said.

A jury convicted Nacchio for the 19 sales he made in April and May 2001.  Last month, U.S. District Judge Edward Nottingham sentenced him to six years in prison.  He also ordered Nacchio to forfeit the $52 million he grossed on illegal sales and pay a $19 million fine.

Nacchio's lawyers have raised several issues for appeal, including that the jury pool was tainted because of negative media coverage and that jury instructions were flawed.  They also argue that Nacchio's prosecution was unprecedented because the "insider" information the government alleged he had was about projections for future quarters, not for the quarters during which he made the sales.

The judges

A look at the three judges who granted Joe Nacchio's request to remain free pending appeal:

-  Paul J. Kelly:  University of Notre Dame and Fordham University School of Law.  In private practice in Santa Fe from 1967 to 1992.  Served in the New Mexico House of Representatives from 1977 to 1981.  Nominated by President George H.W. Bush in 1991.

-  Michael W. McConnell:  Michigan State University and University of Chicago School of Law.  Clerked for Supreme Court Justice William J. Brennan.  Worked in government and as a professor before being nominated in 2001 by President George W. Bush.

-  Jerome A. Holmes:  Wake Forest University, Georgetown University Law Center, Harvard University.  Private practice in Washington, D.C.  Assistant U.S. attorney in Oklahoma.  Nominated by President Bush in 2006, making him the newest judge on the 10th Circuit Court of Appeals.

Source: U.S. Court Of Appeals For The 10th Circuit or 303-954-5343,2777,DRMN_23910_5680342,00.html