AUSWR
The Association of U S West Retirees
 

 

 

Prison time satisfies former and current Qwest workers
General feeling is judge meted out right punishment

By Joanne Kelley And Chris Walsh
Rocky Mountain News
Sunday, July 28, 2007


Mimi Hull gleefully called out "Bye, Joe" as the former Qwest CEO sped away from the courthouse where he received a six-year prison sentence Friday.  Minutes earlier, the retired U S West executive had been doing what she called "a happy dance" as she left the courtroom where a host of onlookers learned of Joe Nacchio's fate following his April conviction for insider trading.

"I would have liked a little longer sentence," said Hull, president of the association representing retirees of the regional phone company Qwest bought in 1999.  "But now he's a convicted felon going to jail."


George Kochaniec Jr. The Rocky

Mimi Hull, president of the Association of U S West Retirees,

gives thumbs up Friday after leaving the federal courthouse in

Denver where former Qwest CEO Joe Nacchio was sentenced.

Later, as Nacchio was driven away, Hull called out, "Bye, Joe."

 

While Hull has been among the most outspoken critics of Nacchio, the case has been followed closely by many retired and current employees of Qwest.

Some of them lost their jobs and others lost money and benefits after Qwest ran into severe financial difficulties during and after Nacchio's reign.

Two Qwest workers, who didn't want to give their names because they still work for the company, took the day off Friday to attend the sentencing.  They said they were happy about the judge's order requiring Nacchio to forfeit $52 million.

Investors also turned out to bear witness to Nacchio's day of reckoning.

"I needed to see the justice system work," said David Nilges, a commercial real estate broker in Centennial.  "My confidence in corporate society is so eroded.  I've got to believe a lot of other people feel that way."

Nilges said he didn't own a lot of Qwest stock but "just enough to make me mad" about what happened.

While he lamented the effect the jail time would have on Nacchio's family, Nilges said it was important for the judge to make an example of Nacchio.

"This man exemplifies the whole culture of CEOs.  He was greedy," Nilges said.  "The judge jumped right on it."

Those attending the sentencing even included some who have little connection to Qwest other than paying a monthly bill.

Dave and Diane Mills, of Loveland, have been living in Denver this summer to explore the city.  When they read about the sentencing, they decided to check it out even though they had never done something like that before.

"It's rewarding to watch how justice works," Diane Mills said.

Daniel Morris, of Aurora, showed up for the same reason.

"There are too many countries where people get away with things," Morris said.  "I'm glad I came.  I'm proud to be American."

Morris said he wished U.S. District Judge Edward Nottingham would run for office.

"I really admire that judge," he said.  "I definitely would (vote) for him if it were possible."

Nearby, on a street corner outside Qwest's downtown headquarters, Margaret Crisp was selling flowers.  She said two of her customers made Nacchio-related purchases.

"They both told me they decided to buy flowers to celebrate Nacchio getting sentenced," Crisp said.

She worked at Qwest in the facilities department for more than three decades before leaving five years ago.  Crisp estimates she's lost about a third of her retirement funds since Qwest's stock imploded under Nacchio.

"I think his (sentence) is fair, but it's too bad we'll probably never really see much of that money," Crisp said.

Indeed, most investors will receive just pennies on the dollar.

James Gilbert, an electrician in Denver, thinks Nacchio got off a little light.

"The penalties should have been stiffer," Gilbert said as he smoked a cigarette in front of the Qwest building.  "They have to crack down on this or it won't end."

A Qwest worker, who declined to provide his name because employees have been instructed not to talk to the media, said the general feeling in the office is that justice has been served.

"I hate to see anybody go to jail and to see the impact on their family, but we do have laws that you have to follow," he said.  "The rich shouldn't be any different.  I'm glad it wasn't a big fine and no jail time."

Trial at a glance

Joe Nacchio was king of the telecommunications industry, taking Qwest public and then manufacturing a whirlwind deal to acquire U S West.  Nacchio, Qwest founder Phil Anschutz and a handful of senior staff made millions.  Then the bottom fell out and the feds came calling, culminating in an April 20 conviction and Friday's sentencing.  Here's a recap of his monthlong trial:

  March 19:  Jury selection begins

  March 20:  Prosecution and defense lawyers give their opening statements.

"This is a case about cheating," said James Hearty, assistant U.S. attorney.

"We are going to demonstrate and show and prove to you that the accusations in this case are false," said Herbert Stern, Nacchio's lead attorney.

  March 26:  Former Qwest CFO Robin Szeliga says she warned Nacchio repeatedly in late 2000 and early 2001 that the company would have trouble meeting its 2001 revenue projections.  "I explained to . . . Mr. Nacchio that business units were still concerned, very concerned, that they could not meet the targets assigned to them."

  March 28:  Prosecutors say they plan to call Nacchio's former financial adviser to the stand to testify that Nacchio tried to hide $90 million in assets by moving them into his wife's name in February 2002.

  March 29:  Former Qwest President and Chief Operating Officer Afshin Mohebbi issued warnings to Nacchio, including an e-mail message in which he called the revenue targets a "huge stretch."

  April 2:  Mohebbi testifies he sent several memos to Nacchio expressing worries about whether the company could meet its financial targets.  He says he and Nacchio argued about why Mohebbi was becoming involved in investor relations at the company.  "( It was) constantly robbing Peter to pay Paul," said Mohebbi, talking about how Qwest would shuffle its numbers to make revenue targets.

  April 5:  Qwest founder and Denver billionaire Phil Anschutz takes the stand for the defense and recounts how Nacchio told him he wanted to resign from the company after his son attempted suicide.  "We didn't spend any time talking about compensation or about him staying at Qwest.  We talked about his son."

  April 9:  The defense rests its case after calling only three witnesses and without putting Nacchio on the stand.

  April 12:  The jury receives its instructions and begins deliberating.

  April 19:  The jury, on its sixth day of deliberations, finds Nacchio guilty on 19 of the 42 counts in the indictment.

More legal woes

Nacchio's legal problems also are in the civil realm.  Here are the two major ones:

  Securities and Exchange Commission:  seeking $216 million in "ill-gotten gains" and to bar Nacchio from ever serving as an officer for a publicly held company.

  Class-action securities fraud case by Qwest investors.

kelleyj@RockyMountainNews.com or 303-954-5068

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