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The Association of U S West Retirees
 

 

 

Nacchio seeking change of venue
Publicity cited in case against ex-Qwest exec
By Jeff Smith
Rocky Mountain News
Saturday, March 25, 2006

Attorneys for former Qwest Chief Executive Joe Nacchio said Friday they want his insider-trading trial moved out of Colorado because of the "pervasive negative publicity" against him here.  They also questioned whether the U.S. District Court in Denver has jurisdiction in the case at all, because, they said, Nacchio's stock trades were made out of state.

The comments by defense attorneys John Richilano and Herbert Stern came after federal Judge Edward Nottingham shot down, as expected, the defense's motion for the 42-count indictment to be dismissed.

Nacchio, 56, has been accused of dumping $100 million of Qwest stock in the first five months of 2001 after being warned, among other things, that the company's financial targets were a "huge stretch."  Each charge carries a maximum penalty of 10 years in prison and a fine of up to $1 million.

Nacchio wasn't required to appear in court.

U.S. Attorney for Colorado Bill Leone declined to comment after Friday's hearing. Defense attorneys also didn't comment.

It's rare for a judge to grant a change of venue except in high-profile criminal cases such as the Timothy McVeigh Oklahoma City bombing case.

And to prove the Colorado court lacks jurisdiction, defense attorneys likely will have to show Nacchio didn't place telephone calls from Denver to his investment managers.  Stern acknowledged he didn't know;  Nottingham suggested he ask Nacchio.

Nottingham rejected defense assertions that the alleged warnings to Nacchio failed to rise to the level of material information required to be disclosed to investors.  Nottingham cited case law that "materiality is a question for the jury."

But Nottingham did side with the defense that the government's allegations were too vague and required the prosecution to "flesh out" what experts have called a bare-bones indictment.

Among other things, prosecutors are being ordered to identify some of the "risky" one-time transactions Qwest made and how the various financial risks would put the company's targets in jeopardy.

Stern re-argued the defense's position even after Nottingham denied the motion for the case to be dismissed.

In a glimpse of what may come during a trial, Stern maintained Nacchio didn't have to refrain from selling stock because the financial risks he was warned about weren't material and that the government hasn't questioned the accuracy of Qwest's accounting.

Stern made the quip that one would have had to "join hands in a seance" in 2000 to know Qwest was later going to fall on hard times.

Insider-trading cases hinge on a defendant's state of mind at the time he sold stock, and prosecutors will need to convince a jury that Nacchio knew Qwest's numbers were being propped up by risky one-time deals.

Nacchio, who served on a government advisory panel, has also indicated he may argue that he possessed classified information that made him optimistic about Qwest's government business prospects.

Nottingham said he still hopes for a trial as early as this fall and indicated he will likely set the date at the next pretrial hearing June 9.

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_4569450,00.html