gratified at Nacchio sentence
By Jeff Smith
Rocky Mountain News
Thursday, August 2, 2007
Former lead prosecutor William Leone sat in the packed courtroom
gallery last Friday, watching Joe Nacchio's sentencing in
relative anonymity. It was a strange feeling, Leone said. But
it also was "very gratifying to see the process come to an end
As assistant and U.S. attorney for Colorado, Leone, 50, said he
spent about 85 percent of his 60- to 70-hour workweeks on the
Qwest case between 2002 and 2006.
He returned to private practice last year as a partner at Faegre
Leone said he thinks the six-year prison sentence for Nacchio is
just, and he praised U.S. District Judge Edward Nottingham for
doing an "exceptional" job.
"I thought the reference to Thomas More was on point," Leone
said. In sentencing Nacchio, Nottingham quoted Sir Thomas More
from the play, A Man for All Seasons, in talking about
the importance of the rule of law.
For Leone, the message was this: "Even though very powerful
people can become frustrated by all these laws that constrain
them, once they start picking and choosing the laws to follow,
all respect for the laws disappears."
Leone said a number of CEOs back then seemed "very dismissive of
Like others, Leone wonders what Nacchio would have said if an
attempt at a last-ditch statement hadn't been cut off for being
Leone took some heat during his tenure for his handling of the
investigation. Critics said he made too many immunity deals,
should have gotten more convictions and made an Arizona
revenue-inflation case against four former midlevel executives
A number of former Qwest executives collectively sold tens of
millions of dollars of stock in late 2000 and early 2001. Only
Nacchio will be serving prison time -- for $52 million of stock
sales in April and May 2001.
Former Chief Financial Officer Robin Szeliga, who pled guilty to
one count of insider trading, received six months of house
arrest and two years of probation for an April 2001 stock sale
that netted her $125,000.
Leone said that what Nacchio and Szeliga had in common, in
contrast to other former Qwest executives, was this: "They
knew, they spoke, they sold."
In other words, both had knowledge of Qwest's overall business,
both touted the telco's financial condition to investors and
both sold their stock in spring 2001.
Today, Leone is philosophical and seems relaxed as he reflects
on the Qwest case.
"It was a wonderfully satisfying case to work on," he said
Tuesday while sipping a hot chocolate in the Wells Fargo Center
"The nature of the beast is that every one of thousands of
decisions you make gets second-guessed."
Latest developments in Qwest case
• The Securities and Exchange Commission said Wednesday
that it has started to distribute $267 million to about 200,000
investors who bought Qwest stock between July 27, 1999, and July
The fund, which is expected to be distributed within five days,
is the result of settlements by Qwest and several former
executives in connection with alleged financial fraud during
former CEO Joe Nacchio's tenure.
"It is gratifying to see money returned to Qwest's investors,
and we will continue our efforts on their behalf," Don Hoerl,
the SEC's associate regional director in Denver, said in a
The fund will return only pennies on the dollar for investors
who lost billions during the period. But the SEC said that more
money may be added through pending litigation against former
• A $400 million Qwest shareholder class-action
settlement also will be added to the investor restitution fund.
That money was supposed to be distributed now as well but is
held up by a legal challenge by Nacchio and former Chief
Financial Officer Robert Woodruff, who opposed being left out of
• Qwest Communications said the Justice Department's
investigation of the Denver telco, which started in July 2002,
is believed to be complete.
The statement came in the company's quarterly filing to the
SEC. Qwest also noted in the filing that a civil fraud trial
against Nacchio still could take place and, if so, "heightened
scrutiny" of the company during the trial "could adversely
affect investor confidence."
smithje@RockyMountainNews.com or 303-954-5155