witness list takes form
Prosecutors working deals to bring former Qwest execs to
By Jeff Smith, Rocky Mountain News
Saturday, December 3, 2005
Prosecutors are negotiating last-minute deals with several
former top Qwest executives in efforts to "bullet-proof" a
likely insider-trading case against former Chief Executive
Joe Nacchio, a source familiar with the investigation said
Friday. Afshin Mohebbi, former president and chief
operating officer, has agreed to cooperate with the
government in exchange for immunity from criminal
prosecution, and prosecutors are trying to negotiate a
tougher deal with Drake Tempest, Qwest's former chief legal
officer, the source said.
Former Chief Financial Officer Robin Szeliga already has
pleaded guilty to insider trading in relation to a stock
sale in April 2001, with her sentence dependent on her
cooperation and possible testimony.
Prosecutors are trying to "bullet-proof their case against
Joe by lining everyone up" as potential key witnesses, said
Two sources still expect an indictment against Nacchio to be
sought from a federal grand jury before year-end, although
the latest developments show the prosecution still is
working to bolster its case.
Such efforts are typical in corporate prosecutions. It was
unclear Friday whether the effort is being spurred by
questions grand jurors may be asking or by other factors,
such as the possible implications of a national security
defense strategy being floated by Nacchio's legal team.
Jeff Dorschner, spokesman for the U.S. attorney's office,
couldn't be reached Friday but has previously declined to
comment except to say the criminal investigation is
continuing. Nacchio's attorney Herbert Stern didn't return
a phone call this week.
The investigation is believed to be focusing on the spring
of 2001. Szeliga said in her plea agreement that other
Qwest senior executives knew by at least April 24, 2001,
that Qwest was boosting its numbers through questionable,
undisclosed deals. Nacchio sold about $50 million of stock
in a three-week flurry starting April 26, 2001.
Nacchio has repeatedly denied any wrongdoing and, through
one of his attorneys, has said he sold stock to diversify
Prosecutors wanted to get Mohebbi to plead guilty to a
criminal charge, the source said, but apparent immunity
isn't a surprise. Although e-mails implicated Mohebbi in
some questionable fiber-optic capacity deals, he didn't make
money on stock sales during that time, nor did he play a key
role in disclosing financial information to investors.
Mohebbi's attorneys didn't return phone calls Friday.
Tempest, who did sell stock in the spring of 2001, could be
an even more important government witness if a deal is
reached. Besides being the top chief legal officer, Tempest
was close to Nacchio, often commuting with him to the East
Coast on weekends and having dinner with him in Denver.
Tempest's attorney James Nesland didn't return a phone call
Other possible witnesses against Nacchio could include
Gregory Casey, Qwest's former top sales executive, several
former finance executives, and Mark Iwan, a former Arthur
Andersen audit partner.
Casey has settled civil-fraud charges related to his role in
fudging network-capacity deals. Iwan, who was disciplined
by the Securities and Exchange Commission but doesn't face
fraud charges, raised red flags about Qwest's deals and
disclosures to the company's audit committee chairman and
finance executives in the spring of 2001.
The Wall Street Journal
reported last week that Nacchio's lawyers recently have been
pursuing an unusual national-security defense, arguing
Nacchio believed through his position on a President
Bush-appointed panel that Qwest was poised to land some
major federal contracts.
While some have painted that strategy as desperate, former
federal prosecutor Christopher Bebel said it could pose
"This tactic may appear unseemly, but it constitutes good
lawyering," Bebel said by e-mail this week. He said the
strategy initially is being used to try to get the
prosecution to think twice about seeking an indictment.
If an indictment against Nacchio is returned, the defense
could "argue that the jury must be told of key national
security considerations he was aware of, and which impacted
his thought process," Bebel said. "If the judge declares
certain national security information off limits, Nacchio
will be able to make a strong argument in this area on
appeal (if he's convicted) - he will claim that his
inability to put this evidence before the jurors effectively
denied him of his right to a fair trial."