Nacchio facing 7 years-plus, if prosecutors have their way
Defense argues for leniency, based on 'prior good works'
By Sara Burnett
Rocky Mountain News
Saturday, July 7, 2007
Former Qwest CEO Joe Nacchio should serve more than seven years
in prison and pay a $19 million fine for his conviction on 19
counts of insider trading, prosecutors argued in court documents
filed Friday. The seven-year, three-month prison term is the
maximum allowed under federal sentencing guidelines, and is
necessary to deter other corporate insiders from committing
similar crimes, prosecutors said.
"Any lesser sentence would send a message of tolerance of the
egregious behavior proven at trial," the document states.
Prosecutors also are seeking forfeiture of the $52 million they
say Nacchio made off the illegal stock sales.
Nacchio's attorneys, meanwhile, filed documents arguing the
former CEO should have to forfeit only $1.8 million. That's the
amount, minus costs and taxes, that a financial analyst has
determined was "gain attributable to the material inside
information," they said. His attorneys also asked U.S. District
Judge Edward Nottingham to consider a lesser prison sentence
because of Nacchio's "prior good works" and because his time in
prison could have a negative impact on the health and possibly
"the life expectancy" of two of his family members.
The document does not name the family members, but prosecutors
identified one in their court filing as Nacchio's oldest son,
who defense attorneys said at trial had attempted suicide while
Nacchio was working for Qwest.
Nacchio is scheduled to be sentenced July 27 in federal court in
He was convicted in April of illegally selling Qwest stock in
April and May 2001. At the time, Nacchio knew the company
couldn't meet aggressive revenue goals. He should have shared
that "insider" information with shareholders and other members
of the public before he sold his own stock, the jury found.
In the document filed Friday, prosecutors called Nacchio's 19
separate stock sales in April and May 2001 "a calculated scheme
to unload as much stock as possible while misleading the
markets," and said he was business-savvy enough to know better.
"No one knew better than the defendant how important the
information was that he refused to share with investors,"
They also said Nacchio's sentence should be more severe than
that of the only other former Qwest employee convicted of
insider trading, Robin Szeliga, the former chief financial
Szeliga, who testified against Nacchio, was sentenced to two
years of probation and six months of home detention and given a
$250,000 fine. She also was ordered to repay the $125,000 she
netted from her illegal sales.
Prosecutors also rejected Nacchio's arguments for a lesser
prison sentence, saying the former CEO's wife has the time and
resources to care for the other family members in his absence,
and Nacchio's "prior good works," or charitable work, are not
out of the ordinary for a corporate executive.
Nottingham will make the final decision on sentencing.
burnetts@RockyMountainNews.com or 303-954-5343