Feds ask to freeze
In fact, Nacchio was so "paranoid" by October 2002 that he considered divorcing his wife, Anne Esker, to keep creditors away from his finances, according to the filing.
Nacchio was convicted of 19 counts of illegal insider trading last month for stock sales he made in April and May 2001. Prosecutors want him to forfeit $52 million in ill-gotten gains connected to those trades.
"The United States is concerned about whether, with further delay, there will be assets to satisfy any forfeiture (as well as any fines)," prosecutor Kevin Traskos wrote in the filing, made Friday in Denver federal court.
The defense argued during trial that the government should not be allowed to introduce information to the jury about Nacchio's asset transfers to Esker because, among other reasons, those transfers occurred in 2002, which was outside the time frame of the charges. U.S. District Judge Edward Nottingham agreed.
Nacchio's attorney, John Richilano, could not be reached for comment Sunday night.
The government is seeking a temporary freeze on Nacchio's assets and a sworn itemization of any assets he holds, including those under the names of his wife and his family foundation. Traskos added that Nacchio should be directed to immediately deposit $52 million in assets to the court registry.
The filing states that Nacchio and his wife own four homes - three in New Jersey and a $9.5 mansion in Florida. It also states Esker has three cars registered under her name - a 2007 BMW, a 2006 Porsche and a 2005 Mercedes-Benz - and that Nacchio has one - a 1997 Porsche.
Nacchio, 57, is to be sentenced July 27. His attorneys have said they will appeal his conviction.
Nacchio was indicted in December 2005 on 42 counts of illegal insider trading. The government alleged he sold $100.8 million in Qwest stock on the basis of material, nonpublic information that the company's finances were deteriorating. A jury last month convicted him of 19 counts and acquitted him of the other 23.
He still faces a civil fraud case filed by the Securities and Exchange Commission.
According to Friday's filing, Nacchio's legal problems began to swell in 2002. He and Qwest "became the subject of intense scrutiny" in February 2002 after the SEC issued a subpoena on the Denver-based company.
On Feb. 19, 2002, the same day he was hit with a class-action lawsuit, Nacchio abruptly transferred assets out of his name. He spoke that day with his then-financial adviser David Weinstein, who testified for the government during Nacchio's criminal trial, about the transfer.
Rob Borteck, Nacchio's estate- planning attorney, "suggested Joe get assets out of his name," Weinstein wrote in a memo about the meeting, according to the filing. "Joe is in the process of transferring his accounts from his name to Anne's name."
"The total amount transferred between brokerage accounts during this late February 2002/early March 2002 time frame ... totaled at least $133,495,931," the filing states, adding that Nacchio also transferred a home in Chester, N.J., to Esker.
In October 2002, after he was hit with a lawsuit by the New York attorney general's office, Nacchio held an emergency meeting with Weinstein.
"Joe basically wants to have no assets in his name and he can then claim he is bankrupt," Weinstein wrote about the meeting.
Later that month, Weinstein spoke with Borteck, who mentioned Nacchio was considering a divorce "for financial reasons."
"Joe is getting very paranoid. In fact, Joe is exploring the possibility of a divorce for financial reasons," Weinstein wrote. "The money that transferred to Anne prior to March would then be considered an equitable distribution and not subject to the claims of creditors. It seems to me there is a certain element of fraud involved in this technique, but Rob reiterated this is only at the exploratory stage."
Staff writer Andy Vuong can be reached at 303-954-1209 or email@example.com.
BY THE NUMBERS
Assets prosecutors say former Qwest chief Joe Nacchio tried to hide
Assets prosecutors want Nacchio to surrender from illegal stock trades