Fair trial at issue in
9-judge panel to hear arguments over key witness
By Jeff Smith
Rocky Mountain News
Saturday, September 20, 2008
Did former Qwest CEO Joe Nacchio get a fair trial?
That may be the critical underlying question as the full 10th
Circuit Court of Appeals takes up the case, hearing oral
arguments on Thursday (September 25).
A three-judge appellate panel earlier this year decided by 2-1
that a defense witness was improperly excluded at Nacchio's
trial and ordered a new trial. Nacchio had been convicted
on 19 counts of insider trading.
The full appellate court has agreed to take a second look at the
panel's decision and consider whether Nacchio's conviction
should stand, whether a new trial is in order or whether the
issue of the expert witness' exclusion should be sent back to
U.S. District Court. The last scenario is considered the
"This is all about fairness,"
criminal defense attorney Jeralyn Merritt said Friday.
"One of the fundamental basics of any trial is that a defense
has the right to present witnesses."
Rick Kornfeld, a Denver
attorney and former federal prosecutor, also said the case is
"Did the District Court cut the defense off at the knees?"
But Kornfeld said the fact the full court has decided to review
the panel's decision suggests there are judges on the circuit
court who may believe Nacchio did get a fair trial despite the
fact that witness Daniel Fischel wasn't allowed to offer expert
testimony. Fischel did testify for nearly three hours
about the pace of Nacchio's stock sales.
Nine judges, including the three from the panel, will hear the
arguments. The court standard is for the defense and
prosecution to get 15 minutes each, but the hearing is expected
to take longer because of questions. The judges can issue
their ruling whenever they want.
Nacchio was sentenced to six years of prison, fined $19 million
and ordered to forfeit $52 million of stock proceeds. But
he has been free on $2 million bail pending the appeal.
Nacchio's defense team says Fischel would have testified that
the information prosecutors say Nacchio should have disclosed
before selling his stock in the spring of 2001 wasn't
Fischel was expected to say that once the information was
disclosed months later, Qwest's stock price wasn't significantly
An analyst who testified for the prosecution at trial said he
would have considered the information about the magnitude of
Qwest's sales and swaps of communications capacity to be
Analysts began to question Qwest's financial condition around
June 2001 and the company's stock price had already started
dropping significantly by the time Nacchio finally disclosed the
information later that summer.
Nacchio's attorneys have maintained that Fischel's testimony
would have gone to the "heart" of the defense and that U.S.
District Judge Edward Nottingham didn't notify them they had to
prove Fischel's reliability through additional written testimony
or by requesting a hearing.
Prosecutors have dismissed the argument, saying Nacchio's
attorneys had "ample opportunity" to establish Fischel's
reliability by describing his methodology but failed to do so.
They say Fischel's testimony only became the heart of the
defense "on appeal and hindsight."
Among those watching closely will be employees, retirees and
investors who lost large amounts of money when Qwest's stock
There is a change of players from the hearing before the
three-judge panel, when a relatively inexperienced 32-year-old
government attorney was pitted against Nacchio's appellate
attorney, Maureen Mahoney, who has a long and stellar record
arguing cases in front of the U.S. Supreme Court.
This time, veteran appellate attorney Edwin Kneedler, principal
deputy solicitor general for the Justice Department, will be
arguing for the government against Mahoney. Earlier this
year, Kneedler, 62, argued his 100th case in front of the U.S.
* Oral arguments in the Joe Nacchio case will be heard 1 p.m.
Thursday in front of the full 10th Circuit Court of Appeals at
the Byron White U.S. Courthouse at 1823 Stout St. (The public
can attend but the seating, which includes an overflow room, is
on a first-come, first- served basis).
The four questions the circuit judges will consider:
* Did Nacchio's defense team have sufficient notice that it was
required to present witness Daniel Fischel's methodology or
request a hearing?
* Did Nacchio have adequate opportunity to present the
methodology or request a hearing?
* Did the defense have a burden to request a hearing?
* Did U.S. District Judge Edward Nottingham abuse his discretion
in excluding Fischel from offering testimony? If so, would
a new trial be an appropriate remedy or could a new evidentiary
hearing be held?