Ex-Qwest CEO Nacchio ordered to prison April 14
By CATHERINE TSAI
Associated Press
April 7, 2009
DENVER (AP) — A judge on Tuesday ordered former Qwest Chief Executive Joe Nacchio to report to prison by noon on April 14 to start a six-year sentence on his insider trading conviction.
Nacchio had asked for bail while he appeals his 2007 conviction to the U.S. Supreme Court. But U.S. District Judge Marcia Krieger said Nacchio hadn't shown he would likely win a reversal of his conviction or be granted a new trial.
Krieger said she did not consider whether Nacchio's conviction was proper or what the outcome of an appeal might be. She did say she had to consider whether his appeal raised a substantial question of law or fact likely to result in a reversal, new trial or new sentence without prison time.
Nacchio was convicted on 19 insider trading counts but acquitted on 23 counts.
Apart from his appeal to the Supreme Court, Nacchio has asked Krieger for a new trial on grounds that testimony from former Qwest Chief Financial Officer Robin Szeliga in a pending civil case against him could lead to acquittal. Krieger has yet to rule on that request.
U.S. prosecutors argued in a filing late Monday in U.S. District Court that to win a new trial, Nacchio would have to show Szeliga's testimony is new, could not have been obtained earlier, doesn't rehash earlier testimony, is material to his case and would probably lead to acquittal.
"Defendant Nacchio's motion does not satisfy all of these elements. It does not even come close," prosecutors wrote.
Prosecutors alleged Nacchio sold $52 million in Qwest Communications International Inc. stock in 2001 knowing the company's future earnings were substantially at risk but did not tell investors.
Nacchio's lead appeals attorney, Maureen Mahoney, was out of the office Tuesday and was not available for comment. But she has argued that the magnitude of risk presented to jurors at trial was wrong.
Szeliga testified at Nacchio's trial about that risk. She also was deposed in February in a civil case filed by the Securities and Exchange Commission. The SEC alleges Nacchio and other former Qwest employees coordinated a financial fraud that allowed Qwest to improperly report about $3 billion in revenue.
Nacchio's attorneys argue that Szeliga's new testimony indicates that when she warned Nacchio Qwest might miss a 2001 revenue target by almost $1 billion, she was referring to a higher internal sales goal, not a lower target that Nacchio stated publicly.
Prosecutors argue that Nacchio's attorneys were aware of that ambiguity at trial. They also said Szeliga did not recant her trial testimony in the deposition testimony.
Her testimony wasn't the only evidence prosecutors collected. In early 2001, other executives recommended that Qwest disclose more about its revenue, but Nacchio responded with disdain, prosecutors said.
Szeliga sold stock in April 2001 and later pleaded guilty to a single count of insider trading based on material information that investors didn't know.
Nacchio had asked the Supreme Court to review whether jury instructions were proper and whether testimony from a defense witness was properly barred at trial. Krieger ruled that even if Nacchio prevailed on those questions, his motion requesting bail didn't address how that would affect his conviction and sentence.
"Not all trial court errors require reversal or a new trial," she wrote.
Krieger said Nacchio also didn't prove he wasn't appealing simply to delay his prison sentence — though she didn't deny the bail request solely on that issue.
Nacchio is to report to the minimum-security Federal Correctional Institution Schuylkill satellite camp in Minersville, Pa. He also has been ordered to pay $71 million in fines and forfeitures.
A former AT&T executive, Nacchio moved to Qwest after being passed over for the top job at AT&T. He resigned from Qwest in June 2002, about two months after Qwest disclosed that the SEC had opened a formal inquiry into its accounting.
Nacchio was one of several corporate executives convicted as part of a government push to punish white-collar executives stemming from major accounting fraud at companies like Enron and Worldcom.
Qwest is the primary telephone provider in 14 mostly Western states.
Copyright © 2009 The Associated Press. All rights reserved.
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