AUSWR
The Association of U S West Retirees
 

 

 

Nacchio 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

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_5319744,00.html