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Leone gratified at Nacchio sentence
By Jeff Smith
Rocky Mountain News
Thursday, August 2, 2007

Former lead prosecutor William Leone sat in the packed courtroom gallery last Friday, watching Joe Nacchio's sentencing in relative anonymity.  It was a strange feeling, Leone said.  But it also was "very gratifying to see the process come to an end like this."

As assistant and U.S. attorney for Colorado, Leone, 50, said he spent about 85 percent of his 60- to 70-hour workweeks on the Qwest case between 2002 and 2006.

He returned to private practice last year as a partner at Faegre & Benson.

Leone said he thinks the six-year prison sentence for Nacchio is just, and he praised U.S. District Judge Edward Nottingham for doing an "exceptional" job.

"I thought the reference to Thomas More was on point," Leone said. In sentencing Nacchio, Nottingham quoted Sir Thomas More from the play, A Man for All Seasons, in talking about the importance of the rule of law.

For Leone, the message was this:  "Even though very powerful people can become frustrated by all these laws that constrain them, once they start picking and choosing the laws to follow, all respect for the laws disappears."

Leone said a number of CEOs back then seemed "very dismissive of the rules."

Like others, Leone wonders what Nacchio would have said if an attempt at a last-ditch statement hadn't been cut off for being too late.

Leone took some heat during his tenure for his handling of the investigation.  Critics said he made too many immunity deals, should have gotten more convictions and made an Arizona revenue-inflation case against four former midlevel executives too complicated.

A number of former Qwest executives collectively sold tens of millions of dollars of stock in late 2000 and early 2001.  Only Nacchio will be serving prison time -- for $52 million of stock sales in April and May 2001.

Former Chief Financial Officer Robin Szeliga, who pled guilty to one count of insider trading, received six months of house arrest and two years of probation for an April 2001 stock sale that netted her $125,000.

Leone said that what Nacchio and Szeliga had in common, in contrast to other former Qwest executives, was this:  "They knew, they spoke, they sold."

In other words, both had knowledge of Qwest's overall business, both touted the telco's financial condition to investors and both sold their stock in spring 2001.

Today, Leone is philosophical and seems relaxed as he reflects on the Qwest case.

"It was a wonderfully satisfying case to work on," he said Tuesday while sipping a hot chocolate in the Wells Fargo Center lobby.

"The nature of the beast is that every one of thousands of decisions you make gets second-guessed."

Latest developments in Qwest case

  The Securities and Exchange Commission said Wednesday that it has started to distribute $267 million to about 200,000 investors who bought Qwest stock between July 27, 1999, and July 28, 2002.

The fund, which is expected to be distributed within five days, is the result of settlements by Qwest and several former executives in connection with alleged financial fraud during former CEO Joe Nacchio's tenure.

"It is gratifying to see money returned to Qwest's investors, and we will continue our efforts on their behalf," Don Hoerl, the SEC's associate regional director in Denver, said in a statement.

The fund will return only pennies on the dollar for investors who lost billions during the period.  But the SEC said that more money may be added through pending litigation against former Qwest executives.

  A $400 million Qwest shareholder class-action settlement also will be added to the investor restitution fund.

That money was supposed to be distributed now as well but is held up by a legal challenge by Nacchio and former Chief Financial Officer Robert Woodruff, who opposed being left out of the settlement.

  Qwest Communications said the Justice Department's investigation of the Denver telco, which started in July 2002, is believed to be complete.

The statement came in the company's quarterly filing to the SEC.  Qwest also noted in the filing that a civil fraud trial against Nacchio still could take place and, if so, "heightened scrutiny" of the company during the trial "could adversely affect investor confidence."

smithje@RockyMountainNews.com or 303-954-5155

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_5655104,00.html