What it all means - unfettered Nacchio is a free
man for now
By Sara Burnett And Jeff Smith
Rocky Mountain News
Thursday, August 23, 2007
Joe Nacchio won't be reporting to prison anytime soon. With
just weeks to go before the former Qwest CEO was expected to
begin serving a six-year prison term, an appellate panel on
Wednesday ruled Nacchio may remain free on bail while he appeals
his April insider-trading conviction.
The three-judge panel of the 10th Circuit Court of Appeals gave
no reason for granting the request by Nacchio's attorneys,
issuing an order less than two pages long.
But the decision means the panel decided there is a substantial
question of law that, if decided in Nacchio's favor, could
reverse his conviction on 19 counts of insider trading.
Nacchio's attorney, Herbert Stern, said he and Nacchio appellate
lawyer Maureen Mahoney were "deeply gratified" by the ruling.
"We are looking forward to the appeal," Stern said.
The attorney for a group of retirees who lost money when Qwest
stock plummeted under Nacchio's leadership was more skeptical.
The ruling is "an example of the special justice system for the
very rich," said Curtis Kennedy, attorney for the Association of
U S West Retirees.
Meanwhile, U.S. Attorney for Colorado Troy Eid said his office
was disappointed in the decision but pleased the process will
move forward quickly.
"We hope the defendant will start serving his sentence as soon
as possible," Eid said.
The appellate court ordered the appeal to proceed on an
"expedited basis," with oral arguments in December. The court
could then uphold Nacchio's conviction and sentence, or reverse
it and send the case back to the District Court for a retrial or
new sentencing hearing.
Denver defense attorney Jeralyn Merritt said she doesn't believe
Wednesday's decision is a clear sign that Nacchio's conviction
will be reversed.
She pointed to other convicted former executives who also were
granted bail pending appeal: WorldCom's Bernie Ebbers and
Adelphia's John and Timothy Rigas. Ebbers and the Rigases are
now in prison.
Attorney Scott Robinson agreed, saying the decision of three
judges is not definitive.
"While (the panel) gave on one hand, it took away on the other,"
Robinson said. "While permitting him to be out on bond, they're
giving him a very short leash by expediting the appeal."
John Holcomb, University of Denver associate professor of
business ethics and legal studies, said the panel may have given
the benefit of the doubt to Mahoney when it issued its ruling.
The Washington, D.C.-based lawyer is a highly regarded appellate
attorney who has won all but one of the dozen cases she has
argued before the U.S. Supreme Court. That reputation "could
carry some weight" with the appellate judges, Holcomb said.
Prosecutors argued during a five-week trial that Nacchio knew
when he sold stock between January and May 2001 that Qwest would
not meet aggressive revenue projections. Nacchio should have
shared that information with investors before he sold his stock,
A jury convicted Nacchio for the 19 sales he made in April and
May 2001. Last month, U.S. District Judge Edward Nottingham
sentenced him to six years in prison. He also ordered Nacchio
to forfeit the $52 million he grossed on illegal sales and pay a
$19 million fine.
Nacchio's lawyers have raised several issues for appeal,
including that the jury pool was tainted because of negative
media coverage and that jury instructions were flawed. They
also argue that Nacchio's prosecution was unprecedented because
the "insider" information the government alleged he had was
about projections for future quarters, not for the quarters
during which he made the sales.
A look at the three judges who granted Joe Nacchio's request to
remain free pending appeal:
- Paul J. Kelly: University of Notre Dame and Fordham
University School of Law. In private practice in Santa Fe from
1967 to 1992. Served in the New Mexico House of Representatives
from 1977 to 1981. Nominated by President George H.W. Bush in
- Michael W. McConnell: Michigan State University and
University of Chicago School of Law. Clerked for Supreme Court
Justice William J. Brennan. Worked in government and as a
professor before being nominated in 2001 by President George W.
- Jerome A. Holmes: Wake Forest University, Georgetown
University Law Center, Harvard University. Private practice in
Washington, D.C. Assistant U.S. attorney in Oklahoma.
Nominated by President Bush in 2006, making him the newest judge
on the 10th Circuit Court of Appeals.
Source: U.S. Court Of Appeals For The 10th Circuit
burnetts@RockyMountainNews.com or 303-954-5343