Government Seeks En Banc Review of Joe Nacchio Reversal

By Jeralyn, Section Crime in the News
Posted on Wed Apr 30, 2008 at 04:58:06 PM EST
Tags: Joseph Nacchio (all tags)

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The Government isn't giving up on challenging the reversal of former Qwest CEO Joe Nacchio's insider trading conviction. Today it filed a petition in the 10th Circuit Court of Appeals seeking a review of the reversal by all of the Judges on the court. The reversal was decided by a panel of three judges. The Petition alleges the panel erred in holding that the trial judge was wrong to exclude Nacchio's expert witness.

First, the government challenged the panel's ruling that the district judge "lacks discretion to exclude expert testimony even where the government's motion to exclude the evidence challenges the expert's reliability and the defendant's written opposition makes no showing of reliability and does not request an evidentiary hearing."

[More...]

Second, the government argued against the panel's conclusion "that an economic expert must be permitted to provide 'context' about 'economic concepts' even if the jurors already understand the concepts."

This is all pretty technical stuff.

When the trial judge excluded the expert testimony, he opined that that the criminal rules require the same advance disclosure about the details of the expert testimony as the civil rules and that Nacchio had not complied with the requirements. The panel said the rules are different and that Nacchio had complied with the criminal rule. It also said the Judge was wrong to exclude the testimony based on briefs without a hearing where the defense could present evidence. The panel noted:

The right of a defendant to call witnesses is crucial for testing the prosecution’s case and defeating the charges against him. Indeed, the “right to present a defense . . . is a fundamental element of due process of law.”

In order to get a review by all judges on the court, the Government must show that "such consideration is necessary to secure or maintain uniformity of the court's decisions" or that "the proceeding involves a question of exceptional importance." The Government's petition relies heavily on the second ground, that the question is one of exceptional importance. The Government faces an uphill battle here as petitions for "en banc" or full court review are rarely granted.

A copy of the petition is here (pdf.)

[To be Cross-posted at 5280.com]

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Government Seeks En Banc Review of Joe Nacchio Reversal | 6 comments (6 topical)

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Jeralyn I know you (none / 0) (#1)
by DaytonDem on Wed Apr 30, 2008 at 05:09:50 PM EST

are on the defense side as a practice, but this reversal is a textbook case of the "don't rob the bank become an executive at the bank and embezzle". It illustrates the inequities of the law when a major offender walks like this and thousands are still in prison on non violent offenses. imo

Government Seeks En Banc Review (none / 0) (#2)
by ChiTownDenny on Wed Apr 30, 2008 at 05:51:58 PM EST

I'm a mgmt. schmo employed by a golbal telcom co., not Qwest. I am familiar with this case. Nacchio did not cooperate with the govt's. FISA requests to "spy" on domestic communications. Other telcoms did. Nacchio was indicted on "trumped up" charges, imo. He was unable to present evidence due to "classified" designation of this evidence. He was convicted. He is appealing. This is the case in a nutshell, as I understand it, as a schmo.

Trumped up? (none / 0) (#3)
by jccamp on Wed Apr 30, 2008 at 06:26:35 PM EST

You need to read some of the court documents before you make a giant leap like "trumped up."

Also, the "classified" information the Def. sought to introduce had nothing to do with the government, or "classified" in the sense of government secrets. The classified information was insider business information that purportedly showed that Quest stock prices would rise, not fall. The information was such that anyone with insider knowledge was precluded from trading on that data, which is exactly what Nacchio was charged with doing.

Both the trial court and the appellate judges said that no only was Nacchio not supposed to trade his own stock based on insider info - so that, in effect, Nacchio was asserting that he was not guilty of the crimes because he committed the same crime, only in knowledge that the stock would climb, not drop - but that the testimony he sought to introduce would not have proven anything, even if accepted at face value. That was, of course, because the stock did drop - like a stone. Nacchio hid poor performance figures from the public and analysts so that the stock price would hold up until he could dump a bunch of the soon-to-be cheap stock on the unsuspecting public.

This is not some secret war-on-terror conspiracy by the neocons. Nacchio is a CEO who hid problems with his own company until he could sell $50 million dollars worth of his stock. There was direct testimony from company insiders that Nacchio hid damaging info until there was a "decent interval" between his sales and the release of the info, so his sales wouldn't look so suspicious.

The appeal is based on a very narrow issue of whether the trial judge needed to hold a hearing before excluding a defense expert witness. The appellate court specifically held that there was sufficient evidence presented at the first trial to convict.


classified information (none / 0) (#5)
by txpublicdefender on Wed Apr 30, 2008 at 07:25:55 PM EST

I don't think Nacchio's argument was that it would have been okay for him to trade on the confidential information, but rather that the fact that he was aware of the classified information made it nonsensical for him to have had the motive to sell his stock before the other "insider" news got out about problems with earnings, thus making it more reasonable that he was selling his stock not due to any inside information, but for whatever innocent, appropriate reasons he claimed.


: You're correct. (none / 0) (#6)
by jccamp on Thu May 01, 2008 at 12:18:23 AM EST

I was trying to say that - or something close - that the Def. claimed he had insider knowledge that would indicate a rise in price, and thus he did not have the motive imputed by the government.
Sorry if I was confusing on that point, by adding the court's comments.

The Government (none / 0) (#4)
by The Maven on Wed Apr 30, 2008 at 06:27:00 PM EST

certainly seems to have gone after Nacchio far more aggressively than they otherwise might have had Qwest cooperated in the domestic spying inquiries, but the basis for the criminal indictment grew out of SEC investigations that got underway long before Bush came into office, and those investigations, in turn, were spurred into action by various shareholder lawsuits that had been filed against the company and its directors (including Nacchio) in 1999 and 2000.

Did Nacchio get a raw deal at the hands of the DOJ? No doubt. But let's not make him out to be some great crusading knight; his hands were dirty for other reasons long before the NSA came knocking (though it's entirely plausible that it was because of the already contentious relationship between the company and the investigators that Qwest told the government to take a hike in 2001).
