"Anxious" Nacchio should be resting easy
By Al Lewis, Staff Columnist
Thursday, April 5, 2007
Good thing I'm not on the jury in the trial of former Qwest
chief executive Joe Nacchio, because right now I'd be thinking
about letting him go.
I say this as the columnist Nacchio's defense team has called "a
major architect of ... very hostile stories" -- a guy cited in
court documents as a solid reason to move this trial to another
After the prosecution rested its case Wednesday, I even said as
much to Nacchio, but my words provided no relief. "I'm
anxious," Nacchio said. "I wouldn't be human if I said that I
I could see anxiety in his deep-set eyes. During court
proceedings, I watched him shake both legs beneath the table.
He is not resting easy, but I think he should be.
I'm no mind reader, but to me some of the jurors looked
surprised when the prosecution said it rested its case. One
even shrugged his shoulders, like "What?"
Now, I don't mean to slight the prosecutors. Cliff Stricklin
and his deft colleagues did a remarkable job marshaling all the
circumstantial evidence they could use, while keeping the case
These prosecutors clearly illustrated how Nacchio may have
misled his investors, bullied his underlings, inflated Qwest's
financial results with one-time sales of telecommunications
lines and dumped more than $100 million worth of stock. They
also exposed irregularities in Nacchio's trading patterns and
produced documents that were allegedly backdated to cover some
of Nacchio's questionable trades.
They gave the jury some memorable testimony. On Wednesday, for
instance, Goldman Sachs analyst Prashant Khemka recalled a
conversation he had with Nacchio in January 2002. This is what
Prashant testified that Nacchio told him about the 2000 Qwest-US
"Never believe a word management says at the time of a merger.
Do you think AOL Time Warner management believed what they said
at the time of their merger? Management has to say things to
get the merger done."
No criminal intent shown
Prosecutors may have shown the jury that Nacchio was a hype
artist, a stock dumper and an arrogant CEO. But they have not
shown whether Nacchio had criminal intent when he sold his
It would be nice if someone went to prison for the Qwest mess.
But did Nacchio intend to trade illegally? What was going on in
his mind when he sold his stock? Didn't anyone hear him brag
about his alleged pump-and-dump scheme?
The prosecution fell short of answering these very crucial but
very difficult questions. Now, they can only hope the jury will
look at the piles of money Nacchio made and conclude that
building this fortune was his motive.
The jury, however, might not take this leap. Jurors do not know
from the court record that Qwest restated its earnings after
firing Nacchio. That Qwest stock once fell to 99 cents. Or
that many of the one-time deals used to prop up Qwest's books
are alleged to be fraudulent exchanges. There was hardly even a
victim presented in this case. The only woman called to testify
about her damaged nest egg could not say how much she lost.
No victim, no crime, I always say.
Judge Edward Nottingham wouldn't allow these facts into
evidence, calling them irrelevant or prejudicial. By not
charging Nacchio with accounting fraud -- as the Securities and
Exchange Commission has alleged -- prosecutors have kept their
arguments simple, but they have also hamstrung their case.
They have left a wide screen for the defense to cast shadows of
reasonable doubt. Nacchio was just a victim of the telecom
bust, defense lawyers will argue. He sold stock because his
options were expiring and because he needed to diversify. He
couldn't help it if stock analysts didn't pick up on warnings
about forward-looking statements. He couldn't help it if his
bold predictions about the future did not prove true. He meant
Nacchio's lead attorney, Herbert Stern, is a magician when it
comes to this sort of trick. But one thing Stern has to do now
is keep his client off the witness stand. Too many corporate
executives have convicted themselves on the stand.
Nacchio told me Wednesday it hasn't yet been decided whether
"That's up to my attorneys," he said.
"Don't do it," I told him. "You don't need to. Your case is
Al Lewis' column regularly appears Sundays, Tuesdays and
Fridays. Respond to him at denverpostbloghouse.com/lewis,