settles pension lawsuit for $1.5 million
By Jeff Smith
Rocky Mountain News
Thursday, February 1, 2007
Former Qwest Chief Executive Joe Nacchio has agreed to pay
$1.5 million to settle a fraud lawsuit filed by one of the
country's largest pension funds. Nacchio's deal -- part of
a $46.5 million settlement paid to the California State
Teachers' Retirement System -- is believed to be the largest
he's agreed to make with regard to his alleged misdeeds at
the Denver telco.
Qwest, several investment banks and former auditor Arthur
Andersen will collectively pay about $45 million to settle
the suit, filed in December 2002 by CalSTRS.
The settlement was finalized in early January, but terms of
the deal weren't disclosed until Wednesday. The case was
filed in San Francisco Superior Court.
Nacchio's attorney Herbert Stern couldn't immediately be
reached for comment.
In 2003, Nacchio paid $400,000 to two law schools to settle
charges by New York state Attorney General Eliot Spitzer
that Nacchio improperly made more than $1 million from
lucrative initial public offerings provided by Citigroup's
Salomon Smith Barney brokerage.
Nacchio still faces securities fraud allegations in a
federal class-action case, civil fraud charges by the
Securities and Exchange Commission and 42 insider trading
counts filed by the Justice Department. He is scheduled to
go on trial in Denver on the insider trading charges March
19. He has denied wrongdoing.
Jack Ehnes, CEO of CalSTRS, said the settlement gave members
an estimated 30 times more than they would have received if
the group had participated in the federal $400 million
class-action securities fraud settlement with Qwest.
Ehnes said CalSTRS, which alleged Qwest misled investors,
decided to pursue its case separately not only to recover
more of its estimated $150 million in losses but "to
reinforce our commitment to good corporate governance."
Qwest spokesman Bob Toevs said the company is "pleased to
have the matter behind us."
smithje@RockyMountainNews.com or 303-954-5155