Nacchio defense fees an issue as Washington lawyer joins his
By Andy Vuong, Staff Writer
Thursday, May 24, 2007
Five years removed from being Qwest's chief
executive, Joe Nacchio's name still comes up during the Denver
company's annual stockholders meeting.
A Qwest shareholder asked Wednesday whether the company would
try to recover the money it has advanced to pay for Nacchio's
legal fees -- a tab that continues to rise as Nacchio has
reported hired a top Washington lawyer to appeal his conviction
on 19 counts of illegal insider trading.
Qwest chief executive Dick Notebaert said the company is
reviewing "what is possible and what the correct path is."
He said Qwest's lawyers in Denver and Delaware, where the
company is incorporated, are analyzing the matter to see what
the company can recover.
"It's extremely complex," Notebaert said.
Nacchio has added Maureen Mahoney, a partner in the Washington
office of international law firm Latham & Watkins, to his
already high-profile defense team, The Wall Street Journal
reported late Wednesday on its website.
Mahoney has worked on major appellate cases before, representing
now-defunct accounting firm Arthur Andersen in its appeal of an
obstruction-of-justice conviction. The Supreme Court overturned
the conviction in 2005.
Mahoney's fees will be part of a tab that experts have said
could reach $75 million for criminal and civil proceedings.
Nacchio's defense includes the services of decorated New Jersey
lawyer Herbert Stern, whose previous work as a federal judge on
an airplane-hijacking case in Berlin was turned into a movie
starring Martin Sheen.
Qwest has said its corporate bylaws require the company to
advance legal fees for current and former directors and officers
involved in litigation because of their work with the company.
Qwest hasn't disclosed how much of Nacchio's legal tab has been
paid by insurance and how much has been paid by the company and,
Asked whether shareholders will be given more details about the
fees once the process is completed, Notebaert said, "I would
Nacchio joined Qwest in 1997 and was ousted in June 2002.
Though he led the company through tremendous growth, it nearly
crashed into bankruptcy at the end of his tenure amid the tech
downturn and news of accounting irregularities.
Nacchio still faces a civil fraud lawsuit filed by the
Securities and Exchange Commission and a number of shareholder
lawsuits. The SEC alleges Nacchio and other former Qwest
executives fraudulently boosted Qwest's revenue by $3 billion
from 1999 to 2002.
Staff writer Andy Vuong can be reached at 303-954-1209 or