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Feds try to 86 "I Spy" defense
By Al Lewis, Staff Columnist
Denver Post
Friday, October 5, 2007

Near as I can tell, former Qwest chief executive Joe Nacchio lived a double life as a secret-agent man.

He and his lawyers continue to meet in top-secret rooms in Washington, D.C., as they prepare their appeal of a criminal conviction and fend off a civil lawsuit from the Securities and Exchange Commission.

They're kind of like the guys on that 1960s TV spy spoof "Get Smart," according to Craig Shaffer, the U.S. magistrate judge overseeing the SEC case against Nacchio, who has been convicted on 19 counts of illegal insider stock trading.

"I personally went to Washington to meet with ... an attorney from the Department of Justice," Nacchio lawyer Jeffrey Speiser told Shaffer at a hearing last month.  "We met in a skiff."

"You met in a (what)?" Shaffer asked.

"A skiff," Speiser repeated.

"A skiff is usually a rowboat," Shaffer said.  "The Potomac's nice, but I ... wouldn't conference in a skiff on the Potomac River."

"No," Speiser said. "A skiff ... is a ... sealed room which cannot be penetrated by any electronic equipment."

"Sort of like in 'Get Smart'?" Shaffer asked.  "A 'Cone of Silence' kind of thing?"

"Kind of like that," Speiser said.  "Whatever you say stays in the room, literally."

On the TV show, Maxwell Smart, a.k.a. Agent 86, usually communicated with Chief using this "Cone of Silence" that Shaffer referenced.  It was a transparent bubble that never really worked, leading to ridiculous shouting, slapstick antics and gross miscommunications.

Another recurring gag on "Get Smart" was a rotary-dial telephone concealed in Smart's shoe.  It required dimes and often rang loudly, blowing Smart's cover.

The court transcript does not record any discussions about the telecommunications technology in Nacchio's shoe.

Nor does it indicate what sort of secrets Nacchio wants to use in his defense against the SEC allegations.  But apparently, Nacchio hopes to argue that he was expecting top-secret government contracts that would have helped Qwest meet its earnings projections -- potentially a key point in an accounting-fraud case.

Government lawyers, however, told Shaffer they plan to invoke state-secrets privilege, which would limit his defense.

Prosecutors pulled a similar move during Nacchio's criminal trial, and the "I Spy" defense was never presented.

The Denver Post has asked the federal court where Nacchio was tried to provide transcripts of closed-door hearings where the classified elements of Nacchio's criminal defense were discussed.

The government responded by saying it would provide those transcripts -- redacting all of the classified information -- by this past Wednesday.

I have yet to see these transcripts.  I can't even get a decent explanation as to why.  So I guess I'll have to send our lawyer back to federal court to file more paper.

Both judges, Edward Nottingham in the criminal trial and Shaffer in the SEC trial, have said this classified information is potentially relevant to Nacchio's defense, and yet Nacchio's lawyers have not been able to present it.

"The information that the defendants have targeted is classified," attorney Lisa Olson, who represents government agencies that don't want to be identified, told Shaffer.  "It is subject to various statutory and perhaps governmental privileges under the National Security Act."

Olson would have played well on "Get Smart" herself.  The information she is so vociferously protecting is at least six years old if it pertains to Nacchio's 2001 stock trades.  It's possibly even 10 years old.

How relevant a national-security secret could it really be?

Congress' Energy and Commerce Committee recently sent letters to three major telecommunications companies -- AT&T, Verizon and Qwest.  Lawmakers want to know the extent to which the National Security Agency has been demanding telephone and Internet records to spy on private citizens.

Nacchio reportedly was the only major telecommunications executive who just said no when the agency demanded records of private citizens after 9/11.

He may not be the most likable CEO, but at least he didn't hand over our information without a required court order.  And now, the only place he can talk about it is in a skiff?  Maybe the committee should subpoena him.

Our government has done a fine job prosecuting Nacchio and giving its lawyers awards for a job well done.  But did several government agencies hold down his defense while prosecutors threw punches?

We might know the answer to that question if the government would release the requested transcripts from Nacchio's criminal proceedings as promised.  But my guess is that some bureaucrats have their heads stuck in a cone of silence.

There's a chance that this may all be interesting to the U.S. Court of Appeals.

Government lawyers lose on appeal?

How's that for comedy?

Al Lewis' column appears Sundays, Tuesdays and Fridays. Respond to him at denverpostbloghouse.com/lewis, 303-954-1967 or alewis@denverpost.com.

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