AUSWR
The Association of U S West Retirees
 

 

 

Qwest Ex-Chief Gets 6 Years In Prison for Insider Trading
By Dionne Searcey
The Wall Street Journal
Saturday, July 28, 2007


DENVER -- Citing greed as the driving factor behind Joseph Nacchio's stock sales, a federal judge sentenced the former chief of onetime highflier Qwest Communications International Inc. to six years in prison and two years of probation for insider trading.

Judge Nottingham also ordered Mr. Nacchio to pay a $19 million fine and to forfeit $52 million he gained in illegal stock sales. Mr. Nacchio has to report to prison within 15 days of a date to be determined by the U.S. Bureau of Prisons.

"The crimes of which the defendant were found guilty are crimes of overarching greed," Judge Nottingham said.

"Justice worked here," said Troy Eid, the U.S. attorney in Denver.

The courtroom was packed in part by retirees and investors who lost money when Qwest's stock tanked under Mr. Nacchio's leadership. In April, Mr. Nacchio was convicted in federal court here of 19 counts of insider trading for selling $52 million of stock in the spring of 2001 while knowing that his company's finances were in trouble. He also faces a Securities and Exchange Commission civil-fraud suit.

As the hearing was ending, Mr. Nacchio attempted to make a statement. But Judge Nottingham gaveled the hearing to a close, saying, "Your attorney is clearly signaling to you that it's not in your best interest."

During the hearing Mr. Nacchio occasionally wiped his eyes, particularly when discussion centered on one of his sons, David, whom he had cited in asking for leniency. Mr. Nacchio's lawyers had said their client needed to be readily available to help David, who has long suffered from mental problems.

Judge Nottingham didn't accept the argument, saying that Mr. Nacchio chose to leave behind his son and the rest of his family in New Jersey when he took the job to run Qwest in Denver.

"The only reason I can see why he came here was greed, the love of money," the judge said. "The court sentence in this case is not going to deprive David Nacchio of anything that Joseph Nacchio didn't deprive him of when he came to Colorado."

Mr. Nacchio's attorneys say they will request the sentence to be served in a minimum-security prison in Pennsylvania near the Nacchios' New Jersey home.

His appeal, to be handled by high-profile appellate attorney Maureen Mahoney, will likely focus in part on whether the warnings about Qwest's finances conveyed to Mr. Nacchio by his executive team were materially different from the sunny outlook he conveyed to investors and analysts. Ms. Mahoney will likely argue that the judge erred in instructing the jury about "materiality."

Write to Dionne Searcey at dionne.searcey@wsj.com

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