AUSWR
The Association of U S West Retirees
 

 

 

Ex-Qwest Chief Gets 6-Year Sentence
By Dan Frosch
New York Times
Saturday, July 28, 2007

DENVER, July 27 — A federal judge on Friday sentenced Joseph P. Nacchio, the former chief executive of Qwest Communications International, to six years in prison in what prosecutors called the largest insider-trading case in history.

The judge in the case, Edward W. Nottingham, also ordered Mr. Nacchio to pay a fine of $19 million and forfeit $52 million he earned from illegal stock sales in 2001. Mr. Nacchio was convicted by a federal jury in April on 19 of 42 counts of insider trading.

Judge Nottingham denied Mr. Nacchio’s request for bail pending an appeal, and Mr. Nacchio will have to present himself within 15 days after the federal Bureau of Prisons determines where he will serve his sentence, a process that can take up to 45 days.

At Mr. Nacchio’s request, Judge Nottingham has recommended that the prison term be served at Schuylkill Federal Correctional Institution in Minersville, Pa., which holds both minimum- and medium-security inmates.

Mr. Nacchio, 58, did not issue any comment after the sentencing, and he and his family left the court in downtown Denver under police escort.

“This is what the criminal justice system is all about,” said Troy A. Eid, the United States attorney for Colorado, after the sentencing. “In an age of cynicism, justice can still prevail and even inspire.”

Mr. Nacchio faced up to 10 years in prison on the insider-trading conviction, which related to a period in 2001 when, according to prosecutors, Mr. Nacchio concealed the mounting financial troubles of Qwest, a telephone service provider in 14 Western and Midwestern states, while simultaneously selling millions of dollars in stock. Mr. Nacchio contended he had sold the stock only because the options were scheduled to expire.

At the sentencing hearing, Mr. Nacchio’s lawyer, Herbert J. Stern, pleaded for the judge to consider the well-being of Mr. Nacchio’s son David, who has suffered from mental illness and attempted suicide, leading Mr. Nacchio to consider stepping down in 2001.

“He has a devastating family situation,” Mr. Stern said, as Mr. Nacchio wiped his eyes.

But a federal prosecutor, Colleen Conry, argued that other members of David Nacchio’s family could care for him. She said that Mr. Nacchio did not decide to leave his post at Qwest after his son’s suicide attempt.

“It didn’t matter enough to him then, and it shouldn’t matter to the court now,” she said at the hearing.

Mr. Stern also said that Mr. Nacchio’s stock sales had not been as lucrative as the government contended and that he should consequently not have to pay such a large fine, an argument Judge Nottingham rejected.

Before delivering the sentence, Judge Nottingham addressed Mr. Nacchio extensively, praising his treatment of his family.

“They all rely on Uncle Joe to take care of them,” he said, referring to letters sent to the court by Mr. Nacchio’s relatives.

Judge Nottingham also spoke highly of Mr. Nacchio’s professional ascent. He rose from hardscrabble beginnings in New York City to the boardrooms of the world’s biggest telecommunications companies.

“In many ways, Mr. Nacchio is the classic Horatio Alger story,” Judge Nottingham said. “From immigrant parents, he rose to enormous heights by sheer will and talent.”

But Judge Nottingham also said that although Mr. Nacchio once was a model executive, he had been ultimately swayed by greed.

Quoting from the Robert Bolt play “A Man for All Seasons,” about Thomas More’s refusal to support Henry VIII’s wish for a divorce, Judge Nottingham said that the rule of law must be respected. He said that Mr. Nacchio’s actions required punishment.

Mr. Nacchio, who wept quietly during portions of the hearing, chose not to speak before he was sentenced. After Judge Nottingham had explained his decision, Mr. Nacchio approached the bench with his hands outstretched and asked repeatedly if he could address the court.

Judge Nottingham shook his head.

http://www.nytimes.com/2007/07/28/business/28qwest.html?adxnnl=1&ref=business&adxnnlx=1185615598-T8PCDNCWTW8+44ArCnTrvw