Legal ploy could cloak case
A lawyer for the former Qwest CEO is pressing a familiar
national-security defense in a civil fraud case filed by the
By Andy Vuong, Staff Writer
Thursday, September 27, 2007
Much like his criminal case, Joe Nacchio's national-security
defense is threatening to engulf and place a cloud of secrecy
over a civil fraud case pending against the former Qwest chief
executive and several other former company officials.
Nacchio attorney Jeff Speiser said during a 30-minute hearing in
Denver federal court Wednesday that his request two months ago
for information from four government agencies has gone
A Justice Department attorney said the information is classified
and asked Magistrate Judge Craig Shaffer for 90 days to
determine what can be released.
After much discussion, Shaffer rejected the request, setting a
Nov. 19 deadline for the government to file any documents or
motions related to the classified information. "This case has
to move forward," Shaffer said during the hearing, which dealt
mostly with Nacchio's national-security defense.
The Securities and Exchange Commission alleges, among other
things, that Nacchio and his former subordinates fraudulently
booked $3 billion in revenue from 1999 to 2002. Qwest later
restated much of that revenue. The lawsuit was filed in March
2005 and the earliest the case can go to trial is 2009, if at
The SEC is targeting $176.5 million it says Nacchio received
from the sale of stock during the time. Regulators could seek
three times that amount plus interest and additional penalties.
Other defendants in the case include former Qwest president
Afshin Mohebbi, former chief financial officer Robert Woodruff
and former accountants James Kozlow ski and Frank Noyes.
As part of the national-security defense, Nacchio contends he
was privy to top-secret information beginning in 1997 that led
him to believe Qwest would receive hundreds of millions of
dollars' worth of government contracts. That contention may
help Nacchio fight SEC charges that he publicly stated
unrealistic financial targets so Qwest could complete its June
2000 merger with US West.
Speiser said Wednesday he may seek to depose 20 people whose
names he can't reveal as part of that defense.
The national-security strategy was also used in Nacchio's
criminal insider-trading case, but much of the defense went
unheard during the month-long trial. Nacchio was convicted in
April on 19 counts of insider trading connected to his sale of
$52 million in Qwest stock and was later sentenced to six years
in prison. He remains free on $2 million bond pending his
Federal Judge Edward Nottingham held more than a half-dozen
closed-door pretrial hearings in the criminal case to deal with
Nacchio's national-security defense. Those discussions have
largely been kept under wraps, although redacted transcripts of
the hearings may be released next month.
Staff writer Andy Vuong can be reached at 303-954-1209 or