Qwest's Joe Nacchio Faces Sentencing

I spent a long time on the phone yesterday with reporter Sara Burnett of the Rocky Mountain News discussing the upcoming July 26th sentencing of former Qwest CEO Joseph Nacchio from a legal perspective.

Here's her new article on how much time he is likely to get and the extent of the forfeiture the Judge will impose.


We know from the pleadings filed in the case is that the Government calculates Nacchio's sentencing guideline range at 70 to 87 months and is asking Judge Nottingham to sentence him at the top of the range to 87 months.

In most fraud cases, the guideline range is arrived at by determining the amount of loss involved in the crime. (Because guideline ranges have increased since 2000, the year Nacchio committed his crimes, the Court will use the guidelines then in effect.)

In insider trading cases, the amount of loss is determined by the amount the defendant gained from the offense. The "background note" to the insider trading guideline provided in 2000:

Because the victims and their losses are difficult if not impossible to identify, the gain, i.e., the total increase in value realized through trading in securities by the defendant and persons acting in concert with him or to whom he provided inside information, is employed instead of the victims' losses.

Nacchio and the Government have very disparate views of the "total increase in value" Nacchio realized through his illegal stock sales, with the Government advocating for $52 million and the defense arguing for $1.8 million.

The final decision is up to Judge Nottingham, and the lawyers quoted in Sara's article are correct, it's not worth predicting how he will rule because you just don't know.

The Government in its sentencing statement said Nacchio's theory is a novel one for which there is no legal precedent. If it is novel (which I don't know) and if courts in the past have consistently applied the factors the Government uses to calculate loss, rather than those proposed by Nacchio, I don't envision Judge Nottingham going out on a legal limb to cut Nacchio some slack. But, that's just my opinion.

Rather than speculate on how much prison time the Judge will impose, I'd like to make a different point. Too often, the public and the media toss around numbers like they were cookies. They aren't. They represent years of a person's life. The difference between 70 and 87 months is almost a year and a half. To someone behind bars and his or her family on the outside, that's a big difference.

Let's assume for the moment that the Government's calculations are correct and Nacchio's guideline range is 70 to 87 months and (an even greater speculation) that Judge Nottingham decides to impose a sentence within this guideline range.

Given that Nacchio's offense was a non-violent one and society is not in danger with him living among us, why should he get 87 months instead of 70 months?

The law requires judges to impose a sentence “sufficient, but not greater than necessary” to satisfy the objectives of sentencing. Those objectives are:
  • to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense
  • to afford adequate deterrence to criminal conduct;
  • to protect the public from further crimes of the defendant and
  • to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;

In arriving at a sentence that is "sufficient but not greater than necessary" to achieve these objectives, the Court must consider not just the crime, but the history and characteristics of the defendant.

The Government argues in its Sentencing Statement that 87 months, rather than 70 months, is necessary to "“to provide just punishment, to promote respect for the law, and to protect the public.”

Any lesser sentence would send a message of tolerance of the egregious behavior proven at trial. The need to deter other corporate insiders from taking advantage of the material non-public information they receive as a result of their positions within publicly traded companies is critical.

I disagree. I doubt 87 months (roughly 7 years) sends a different message than 70 months (roughly 6 years) to either the public or future criminals. The Government acknowledges in its statement that Nacchio is unlikely to commit future crimes, so how exactly is the public better protected by Nacchio serving an extra year and a half in prison?

I suspect the Government, as often happens in cases not involving plea bargains with sentence concessions granted for cooperation against others, just wants to max him out.

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    Assuming he is guilty... (none / 0) (#1)
    by jerry on Sat Jul 21, 2007 at 04:03:25 PM EST
    White collar crimes, especially by corporate executives are some of the worse to society.

    They bankrupt companies and devastate employees.  They injure investors.
    They injure and skew the free market.

    White collar criminals have had access to some of the most and best advantages society has to offer them.  And when they get out, they are still employed as well compensated consultants.

    The exemplify the rewards of corruption in society.

    They don't have any sort of justifiable "trying to put food on the table" arguments that many robbers might have.

    I am not sure what violent crimes would get an 87 month term, but I would not discount the harm of any white collar criminal.

    I have no sympathy for any guilty white collar criminal and I think their punishments are usually way too lenient.

    And yes, I am still angry over Ken Lay's escape.

    Weird (none / 0) (#2)
    by scarshapedstar on Sat Jul 21, 2007 at 05:57:53 PM EST
    Has anyone seen Joe Nacchio and Doug Feith in the same room together? Just wondering...

    If the objectives are in fact (none / 0) (#3)
    by Electa on Sat Jul 21, 2007 at 06:27:20 PM EST
    effective then why are the incarceration numbers continuing to rise to the extent that more prisons are needed and the overcrowding problem has become such a burden that counties are shifting resources from schools to offset the rising cost of housing the feds chattel on top of their own?  And, can they be truly classified as objectives? Objectives have timeframes.  When does Congress propose that their grandeous objectives will be met?  And, who is evaluating the outcomes of these so-called objectives to determine if DOP funding should continue based upon effective outcomes?  Recidivism rates are an indicator of the success of the phantom 4....ummmmmmmmm they're rising. Soooooooo should we use recidivism rates as an evaluating factor to determine if DOP should continue to receive taxpayer funding in support of this ungodly servitude?  Their doors would shut down tomorrow if such were the case.

    That's the way it works in the profit/nonprofit world.  If an organization doesn't meet it's goals and objectives in a reasonable or stated timeframe w/measureable results the funding is cut off.  If a for profit company grossly fails to meet the conditions of a contract, legal actions are taken and it's voided.  What makes DOP any different since it's a gov't agency receiving taxpayer funds that should be held under microscopic scrutiny.

    I know first hand objective 3 of the 4 are not being met.  

    Medical treatment is atrocious.  When I was incarcerated a woman came in from DC with a breast tumor the size of a grapefruit.  She had been in VA county jails for months w/o treatment awaiting her prison placement.  She was the property of the Feds. When she finally reached the camp the tumor was so enlarged that she walked tilted to the affected side.  After weeks she was finally sent out for mastectomy surgery and returned after 4 days. It was the inmates who tended to her draining wounds.  Finally she was sent to TX because the wounds were so infected...she escaped by death.  That was only one incident among many at one facility.  Imagine what it's like system wide?

    Education:  It takes years to get into edu programs including GED.  For people with extensive sentences they go to the back of the line.

    Employment:  I never thought there could be unemployment in prison.  There are so many inmates that there's not enough jobs to go around.  I worked in the Chapel along with 20 other women.  It took me 7 mins. to complete my job which was dusting the chapel's 4 window seals.  The remainder of my day was spent reading, working on my writings, or sitting outside in drinking contraband lemonade.  You're not allowed to work in your field of expertise.  A friend has a dual PhD in math and chemistry she was assigned to the mess hall serving line.  She wrote a program to help the women improve their math skills and submitted it to education..the result DOA.

    AOD Treatment:  The drug and alcohol treatment program is a joke and often used as a scapegoat to reduce one's down time and at this particular camp was more of a tool used for proselytizing.  White collar violators really favor this one...which can be viewed as a back door approach to a sentence reduction although it doesn't benefit long timers.  Because they have access to savvy legal counsel and sentencing consultants they're advised up front to claim addiction/alcoholism during the PSR phase to assure acceptance into the program.  There are tricks to every trade.

    This man would be more effective and beneficial to society if he was sentenced to live in a distressed community, preferably urban, teach in a public school setting during the day and conduct asset and wealth development workshops 2 evenings wkly and on Sat. mornings at a community center.  Let him live with the roaches in a rooming house and make due on $154.00/mo in foodstamps and have the gangstas standing guard over him.  That would be a harsh enough sentence for Mr. Nacchio and I gurantee you he will sin no more.

    This sentencing thing is totally out of control.  The Feds have criminalized breathing.  If it happened to me, who had never had a moving violation, and taught my sons to respect the laws of this land, it can happen to anyone in America.  Noone is safe from prosecution.

    He had his chance to be effective, (none / 0) (#4)
    by jerry on Sat Jul 21, 2007 at 07:04:06 PM EST
    He had more of a chance to be effective than almost anyone gets in this world.

    He had society's complete trust and he exploited that and created many many victims.

    I really dislike the way white collar criminals are given second and third chances and then when they get out are given lucrative media and consulting opportunities.


    I'm referring to the lack of effectiveness (none / 0) (#5)
    by Electa on Sat Jul 21, 2007 at 07:48:32 PM EST
    in the system and the drain of taxpayer $$$$ being spent on incessive imprisonment that's not working. I don't understand why Americans are hell bent on incarcerating people, it's crazy.

    Not into incarcerating all people, but CxOs and (none / 0) (#6)
    by jerry on Sat Jul 21, 2007 at 09:33:14 PM EST
    other corporate leaders get many many privileges in their personal and corporate lives.  They demand absurd salaries and then they cry about having to go to jail.  If they can't do the time....

    Regarding effectiveness, I was referring to this statement:

    This man would be more effective and beneficial to society if he was sentenced to live in a distressed community, preferably urban, teach in a public school setting during the day and conduct asset and wealth development workshops 2 evenings wkly and on Sat. mornings at a community center.

    This man would have been far more effective in the role he had as leader of Qwest, responsible for the jobs of 50,000+ employees and the investments of 50,000,000+ investors.  But he chose the path where he enriched himself at everyone else's expense.

    I see no reason to believe that having him teach in a distressed community will reform him and I see ever reason to believe that it will help enrich him later on when he goes to write his book.

    I cannot say enough about the destruction one corrupt person can do as CEO or Senator compared to an armed robber.

    I think this guy can be more effective as an example to other CEOs that they won't all be as lucky and get to escape as Kennyboy did leaving his family with the stolen jewels.


    I understand where u're coming from (none / 0) (#7)
    by Electa on Sun Jul 22, 2007 at 05:52:44 AM EST
    and agree that he "would have been".  Since he wasn't why waste his talents sitting idol for months in prison costing thousands to house this dude.  Extensive sentencing is not a deterrant.  Let's take the gangstas for instance.  I was astounded at the number of women who knew ea. other at that camp.  When one of their friends reached the compound it was like a family reunion. In fact, once they received wind that a homie was coming in, preparation for the welcoming party began.  Prison is not taken seriously.  Often there is more security in prison than on the streets.  I'll never forget Jerry a woman who was developmentally delayed and lived on the streets of DC.  She was severely abused, beaten and raped and somehow ended up at the camp.  She had no family on the outside so the inmates took care of commissary and shared washing her clothes.  It was safer for Jerry in prison than on the outside.  When her release date was nearing she became very agitated and scared because she had nowhere to return.  Once her time was up she was dumped on the streets without any support systems lined up for her.  I often wonder what happened to Jerry, if she's still alive.  

    Although, Nacchio won't experience prison in this manner, I use Jerry as an ex. of how ineffective the prison system is and that excessive imprisonment is not a solution to reducing crime in America.  The rising stats are indicative of this.  

    It may make the public feel good temporarily that someone is going to prison for years under the wicked US Sentencing Guidelines, that should be abolished imo, but it's just that a temporary feel good and from that point incarceration becomes a burden and drain on resources.  

    People adjust to their environments, prison is no different once the initial shock is over, your natural survival instincts kick in and you find yourself extremely creative at making life as comfortable as possible given the circumstances.  Inmates stick together and they look out for one another.  There is nothing that can't be obtained in prison, drugs are abundant, black and milds, blunts, hooch, cell phones, you name it it's obtainable.

    The NO SNITCH Rule is an example of the impact of prison culture on the outside communities. You don't snitch in prison. The first rule I learned...don't ask questions and look the other direction.  Just like Hip hop culture bled over into suburbia so shall the No Snitch rule.  So where's the benefit?  


    electa (none / 0) (#8)
    by jimakaPPJ on Sun Jul 22, 2007 at 03:15:01 PM EST
    In the interest of tranparency I lived through a lot of that and saw a lot of good people hurt badly. And yes, I believe his actions cost me a nice, as they say, piece of change.

    The prision problem in the US is the drug problem. If people quit using drugs it would go down. If we changed the laws it would go down.

    Neither is likely to happen.

    In the meantime Joe should do his 10.


    IMO the prison problem (none / 0) (#9)
    by Electa on Sun Jul 22, 2007 at 08:50:32 PM EST
    in Amerika is an economic and political problem.  The Prison Industrial Complex making billions off the industry, politicians using crime as a fear factor, the media's constant focus on crime for entertainment...nancy grace, greta vansus(?) cops, america's most wanted, dateline, contribute to the phobias.  Drugs are merely a tool used by the establishment.  While Americans are anethesized by Crime TV entertainment Sensenbrenner introduced another draconian bill that could put their teenagers in prison for 10 yrs. for smoking a joint.

    I didn't have anything invested in QWest although my brother lost significantly.  Nacchio should pay his debt to society and dearly.  Hopefully there will be some form of restitution for those who lost a nice piece of change.  Again, it seems more logical to me to make this bugga work the 10 yrs. for his value and his earnings put into a recovery fund for investors instead of working at a camp for .12 an hr. and playing chess all day.


    electa (none / 0) (#10)
    by jimakaPPJ on Sun Jul 22, 2007 at 10:57:29 PM EST
    Whose gonna hire him??

    A CEO's value is dependent upon the preception that he knows how to do things properly.


    He knows how to do (none / 0) (#11)
    by Electa on Mon Jul 23, 2007 at 12:52:14 PM EST
    things properly, he just didn't.  Although he's a crook does not dispel the fact that he's obviously a very intelligent man, well maybe he's not so smart because he got busted.  Anyway his intellectual properties are still in tact, I guess, and he could be placed in a position w/o decision making powers, that pays him a decent salary and that salary is then garnished and placed in a recovery fund for his victims.  Maybe the idea is far fetched but I still believe there should be some alternative to wasting valuable intellectual resources rotting in prison.  And, I think now that more white collar crimers and high profilers, like Gore's son, Libby, Paris, Cunningham, Jefferson, etc. are being prosecuted the sentencing dynamics will change...eventually.  Remember crack wasn't a problem until it hit the burbs and wealthy kids.  Then suddenly something had to be done and Shapiro joined the fight.

    As long as it was po folk being sent to the poker under the inhumane USSG it was fine and dandy.  We'll see how it plays out now that folk of clout are feeling the wrath of the USSG.