Trial of Qwest's Joe Nacchio Begins Monday

I just got back from the courthouse picking up my press pass for 5280 to cover the trial of Qwest former CEO Joseph Nacchio which begins Monday. There will be a lot of national press folks in town for it, including Bloomberg News, the Wall St. Journal and NPR. The Rocky Mountain News and Denver Post will also be covering it.

Nacchio is charged with 42 counts of insider trading resulting from the sale of $100 million in Qwest stock in 2001. In 2000, Qwest was trading at $66.00 a share. In 2002, it was down to $5.00.

Qwest bought U.S. West in 2000.

The highlights for me will be opening statements and the testimony of those who accepted immunity or plea deals in exchange for cooperation against Nacchio.


Since I do have my own cases, I won't be there full time. But, I'll be there a lot. At least I won't have to pay for airline tickets and hotels like I did for the Scooter Libby trial in Washington. So I won't be asking for donations.

Here's a profile of Herbert Stern, Nacchio's lead counsel. You can read about the lead prosecutor, Cliff Stricklin, here.

The trial is being presided over by U.S. District Court Judge Edward Nottingham. Since I always have a few cases pending before him, I'll be pretty polite in my coverage, but I won't hesitate to give my opinion of his rulings and my reaction to the lawyers' presentation and the testimony.
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    Nottingham (none / 0) (#1)
    by jazzcattg1 on Tue Mar 13, 2007 at 06:35:41 PM EST
    Well you have to be nice about Judge Nottingham, Jeralyn but I don't have to...He was the jurist who tried to quash the Do Not Call List....Tried to run the Michael Jackson music plagarism trial with an iron fist yet seated his kid in the courtroom to get Jacko's autograph...Regularly renigs on plea agreements.....and is know by most litigators in Denver as "the worst one down there"....I feel sorry for Mr. Nacchio - two strikes against him already due to the judge, naturally a Republican appointee.

    a question arising out of dot-connecting (none / 0) (#2)
    by scribe on Wed Mar 14, 2007 at 07:38:14 AM EST
    How much of this case is payback for QWest/US West not playing ball on NSA intercepts?

    A nasty question which, in ordinary times, would not be asked.  But, in the current environment, I think it perfectly appropriate.  After all, last I checked, Colorado's US Attorney was not one of the ones who was "replaced".

    And, it's not like QWest was the only telecom whose stock tanked after the turn of the century.  Others (e.g. Lucent, AT&T) did proportionally as badly, yet no one in high positions from those companies seems to have been so severely prosecuted.

    I must admit.... (none / 0) (#4)
    by kdog on Wed Mar 14, 2007 at 08:46:25 AM EST
    the same question crossed my mind.

    I'm of the suspicion the whole stock game is rife with insider trading...deciding who to bust is like deciding what pot-smoker to arrest at a legalization rally.  Was Qwest's refusal to cower to the feds wiretapping demands what brought the heat on?  It certainly wouldn't surprise me from an admin. with a rep for vendettas.


    well, so? (none / 0) (#3)
    by Deconstructionist on Wed Mar 14, 2007 at 07:58:03 AM EST
       do you have knowledge of insider trading or fraud related to those?

       Loss of value does not mean a crime was committed-- even bad business decisions causing other people to lose money  are not crimes.

      If you have something beyond an ineptly loaded question, what is it?  

    The point is (none / 0) (#5)
    by scribe on Wed Mar 14, 2007 at 10:07:06 AM EST
    with respect to insider trading and securities fraud, an aggressive prosecutor can, if so desired, make just about anything into a violation.  Even moreso with respect to wire fraud and money laundering.  Without having a copy of the indictment available, though, I'd be hard pressed to say whether the charges are "overreaching" or not.

    As to the sad stories of busted-out retirees and stockholders being used to make a case against him, though, I'm not that impressed.  The point I tried to make was that there were many, many people who'd put a large chunk of their retirement into other Telco stocks, like Lucent and ATT, which tanked spectacularly in the 2000-2002 time frame.  At the time, a friend and colleague lived in an area which was close to Lucent's home office and related that there were literally tens of people in his acquaintance who were in serious financial trouble because their Lucent stock had tanked - retirements deferred or cancelled, etc.

    What is noteworthy though is that it seems Nacchio is the only corporate titan currently on trial, and that his Telco was the only one which refused to play ball when the NSA came calling.  I don't think his prosecution was a coincidence, any more than I think it was a coincidence that one of the emails (page 22 of 25) in the US Attorney scandal indicates that on May 11, 2006, Sampson wrote Kelley at the White House:

    The real problem we have right now with Carol Lam that leads me to conclude we should have someone ready to be nominated on 11/18, the day her 4-year term expires.

    May 11, 2006 was, of course, the day it became known the Duke Cunningham investigation had expanded to include Rep. Jerry Lewis, a Rethug force on the Appropriations Committee, and the day before search warrants were executed on Dusty Foggo's houses.  Go read the timeline on just how active the whole Cunningham-Foggo-Hookergate mess was in April and early May, and then tell me what "the real problem ... right now with Carol Lam" really was.

     (a) possible white-collar violations are so easy to allege and
     (b) so time/resource consuming to investigate and prosecute and
     (c) likely to result in a defendant properly represented (because there's money available for counsel and because they're often much more defensible than a guy caught with a carload of dope), then
     (d) prosecutors must pick and choose which cases to bring.  (Ask Karl Rove.)  

    Every white-collar case now has to be viewed, and will be viewed, through the prism of whether there was some political motive involved in the calculus of prosecutorial discretion leading to bringing it, and whether the respective US Attorney (who likely would have to have signed off on a seriously-time/resource consuming case) had been on the "retain as loyal boldface" or on the "neutral" or "purge" lists.