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Nacchio Found Guilty Of Insider Trading
By Dionne Searcey
The Wall Street Journal
Thursday, April 19, 2007  7:53 PM

Former Qwest Communications International Inc. Chief Executive Joseph Nacchio was found guilty of 19 counts of insider trading, marking a victory for the government in the last of a string of high-profile prosecutions of corporate brass it began earlier this decade.

The jury, after six days of deliberations, found Mr. Nacchio innocent of 23 out of 42 counts of insider trading.  Mr. Nacchio, 57 years old, could face 10 years of prison for each guilty count.  Mr. Nacchio will remain free until sentencing, which is tentatively scheduled for late July.  He is expected to appeal the verdict.

"For anyone who has ever made a call in Qwest territory the term 'convicted felon Joe Nacchio' has a nice ring to it," said U.S. Attorney for the federal district in Denver Troy Eid.  He called it "an overwhelming determination" of guilt and noted that the verdict carries at least a $1 million fine for each count.

"It has been a long road to get here, after five and a half years, justice has finally been served," he added.

Mr. Nacchio's family broke into sobs while the verdict was read and "not guilty" was heard 23 times.  But they stopped at count 24 and fell silent as the judge said "guilty" on the rest of the counts.  Mr. Nacchio was smiling during the not-guilty verdict, but his face turned expressionless when the guilty counts were read.

Though the verdict was split, Mr. Nacchio now joins a list of once-high-flying executives brought low.  Among them:  former Enron Corp. executives Jeffrey Skilling and Kenneth Lay;  Adelphia Communications Corp. founder John Rigas;  Tyco International Ltd. Chief Executive Officer L. Dennis Kozlowski;  and former WorldCom Inc. CEO Bernard Ebbers.

Mr. Nacchio's conviction shows that the government, several years after it embarked on the aggressive prosecution of executive wrong-doing, has finally perfected its approach to going after corporate criminals.  The formula:  Keep it simple, accumulate witnesses from lower down the corporate ladder with plea deals and pin blame on the chief executive.

The charges that jurors found Mr. Nacchio guilty on dated from trades between April 26, 2001, and May 29, 2001, and are after he canceled his first stock-selling plan.

In July 2002, amid the Enron and WorldCom debacles, Congress passed the Sarbanes-Oxley Act, which stiffened corporate-governance and accounting rules, and President Bush created the Corporate Fraud Task Force in the Justice Department.  Since then, the department says it has secured more than 1,000 convictions or guilty pleas of corporate fraud, including cases against more than 200 chief executives, company presidents and chief financial officers.

Write to Dionne Searcey at dionne.searcey@wsj.com

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