Transfer of assets alleged
Prosecutors claim in court filing ex-CEO tried to hide $90 million
By Andy Vuong
March 29, 2007
Former Qwest chief executive Joe Nacchio tried to hide more than $90 million in assets in February 2002 by transferring them to accounts held solely in his wife's name, the Justice Department alleges in a court filing.
Prosecutors are seeking permission to introduce the evidence when they call Nacchio's former financial counselor, David Weinstein, to the stand in the next few days in Nacchio's criminal insider-trading trial.
Nacchio's lead attorney, Herbert Stern, had raised the issue of how Nacchio handled his family's assets during opening statements last week as a way to show that Nacchio held Qwest stock when he could have sold it.
"Defense counsel emphasized to the jury that defendant 'never sold' his children's shares 'during the entire time he was CEO of Qwest,"' the prosecution's filing states. "He stressed the defendant did not sell his children's shares 'even after 9/11, even after everything' and that 'those children owned 90,000 shares and lost $3.5 (million) to $3.6 million on them' at the time he left Qwest."
The prosecution contends that they should be able to present the $90 million transfer to the jury in order to show that Nacchio, by taking his name off the assets, knew he had done something wrong that could lead to the forfeiture of those assets.
Prosecutors contend that the transfer - which occurred four months before Nacchio was forced out at Qwest - was motivated by his desire to avoid suffering a loss, which "bears strong similarity to the desire that motivated his insider sales several months before," according to the filing, which was made late Tuesday.
Prosecutors said they can present the evidence in less than 10 minutes with three exhibits.
In a response filed with the court, Nacchio's attorneys argued that the "asset transfer evidence has nothing to do with the charges in the case."
White-collar-crime expert Peter Henning said he doesn't think the judge will allow the prosecution to introduce evidence of the $90 million transfer because it is
outside the time frame of Nacchio's alleged illegal insider trading. Nacchio is accused of dumping $100.8 million in Qwest stock in early 2001 while he knew the company's finances were slipping.
Nacchio's attorneys have said he firmly believed the company was financially sound and didn't want to sell all of his shares.
"I would suspect the judge would keep them (prosecutors) on a pretty short leash if he does permit it," said Henning, a professor at Wayne State University Law School in Detroit.
"I think the evidence is relevant, I think it's damaging and I think the government was entirely correct to see if they could get the court to allow the testimony," said former federal prosecutor Anthony Accetta, who is working as a legal analyst for The Denver Post. "Clearly, he's trying to preserve that asset, and the only reason you would try to do that is if you were afraid that down the road you might forfeit it."
The $90 million includes Qwest securities, but further details weren't provided.
A $9.5 million home in Florida is listed under the name of Nacchio's wife, Anne Esker, according to property records. The records show that she purchased the home in July 2005.
The 42 criminal insider-trading counts each carry a maximum penalty of 10 years in prison and a $1 million fine. The government is also seeking the $100.8 million from his stock sales.
writer Andy Vuong can be reached at 303-954-1209 or