Nacchio Losses Bid to Reverse Conviction
By Al Lewis
The Wall Street Journal
Wednesday, February 25, 2009
A U.S. appeals court upheld the
insider trading conviction of former Qwest Communications
International Inc. Chief Executive Joseph Nacchio, reinstating
his prison sentence and revoking his release on bond.
The 10th Circuit Court of Appeals in
affirmed Mr. Nacchio's April 2007 conviction on 19 counts of
insider trading for transactions that occurred as far back as
Mr. Nacchio, who was sentenced to six years in prison, has
remained free on bond during his appeals, but not for much
longer. "The unsecured bond executed by Mr. Nacchio in the
district court is exonerated, and the stay of Mr. Nacchio's
sentence of imprisonment is hereby lifted," the court wrote.
In March 2008, the 10th Circuit ordered a new trial for Mr.
Nacchio after finding that the trial judge improperly excluded
expert testimony. But in September, a broader panel of
appellate judges reviewed that decision in a "en banc" hearing,
an event so rare that lawyers packed the gallery just to see it.
Wednesday's decision overturns the initial decision by the
Mr. Nacchio's attorney, Maureen Mahoney, is preparing a response
she will release to reporters later Wednesday. In the
past, Mr. Nacchio's legal team has indicated it will fight the
case all the way to the U.S. Supreme Court. It will likely
file papers asking for another stay of Mr. Nacchio's prison
sentence, pending further appeal, before he is ordered to
After Mr. Nacchio was fired from the phone company in 2002,
Qwest restated its books, erasing $2.5 billion in improperly
booked revenue from 2000 to 2002.
Qwest's stock, which once traded for more than $60, collapsed to
nearly $1 a
share. Qwest averted bankruptcy, but its shares still
trade for about $3.50.
Mr. Nacchio never got to put on much of his defense during his
trial. He called
only one expert witness: Daniel Fischel, a Northwestern University
professor, who had testified on behalf of savings-and-loan
Keating as well as Enron's Kenneth Lay and Jeffrey Skilling.
Mr. Fischel was to address whether the information Mr. Nacchio
had as he traded his stock fit the legal standard of "material."
The appellate court ruled Mr. Fischel's testimony was improperly
excluded, but then reversed itself on Wednesday.
Mr. Nacchio's initial success in appealing his case has been a
black eye for
"It's a tremendous day for the
government," said former
District Attorney Troy Eid, who prosecuted the case and then
became partner at
Greenberg Traurig. "I couldn't be happier."