Nacchio Seeks New Trial; Filing Faults Prosecutors
By Dionne Searcey
The Wall Street Journal
Friday, March 6, 2009

Days after an appellate court upheld the insider trading conviction of former Qwest Communications International Inc. Chief Executive Joseph Nacchio, his lawyers are asking for a new trial, saying prosecutors mischaracterized testimony from a key government witness.

Mr. Nacchio's attorneys filed a motion in federal court in Denver late Thursday night saying prosecutors' interpretation of former Chief Financial Officer Robin Szeliga was, essentially, "flat wrong," according to the filing.

Two years ago, Mr. Nacchio was convicted of 19 counts of insider trading for selling $52 million in stock in 2001 as he knew his Denver-based telecom company's finances were faltering.  He was sentenced to six years in prison but has been out on bail while his lawyers fight the conviction.  He has been ordered to report to a minimum-security federal prison in Minersville, Pa., on March 23.

Mr. Nacchio has long contended he sold the stock as part of an announced plan that had nothing to do with the state of Qwest's finances.  Last year a federal appellate panel tossed out the conviction, saying the trial judge had wrongly excluded an expert witness.  But last week the full 10th Circuit Court of Appeals upheld his conviction.  Mr. Nacchio's attorneys have said they would ask the U.S. Supreme Court to review his case.

Court documents filed Thursday say Mr. Nacchio has asked the Department of Justice for a new trial.  A Justice Department spokeswoman declined to comment.

"Joe Nacchio has had his case reviewed as much as any defendant and probably more," said Cliff Stricklin, who was lead prosecutor in the trial and now works for the law firm of Holland & Hart in Denver.  "It's time for him to begin serving his sentence."

Mr. Nacchio's appellate attorney, Maureen Mahoney, declined comment.  But in the filing, she draws upon testimony that former Qwest Chief Financial Officer Ms. Szeliga gave recently during a Securities and Exchange Commission case related to the company's financial problems.  According to the filing, Ms. Szeliga's SEC testimony indicates the prosecution's interpretations of her trial testimony made to the jury were incorrect.

During Mr. Nacchio's trial Ms. Szeliga testified she had told him that the company expected certain revenue shortfalls.  However, much testimony centered on whether she was referring to shortfalls in the revenue target given to the public as guidance or a more aggressive internal target.  If it was the latter, Mr. Nacchio would have less incentive to sell off his stock, his attorneys have argued.

Her testimony was ambiguous, and Mr. Nacchio's attorneys say prosecutors misinterpreted it.  In the separate SEC case, Ms. Szeliga made clear that she meant the internal target, the filing says.

Write to Dionne Searcey at dionne.searcey@wsj.com

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