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U.S. tries long shot on Nacchio

Appeals court asked to affirm 2007 conviction

By Jeff Smith, Rocky Mountain News (Contact)

Published April 30, 2008 at 8:49 a.m.

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Joe Nacchio, center, his wife, Anne Esker, and his son, Michael Nacchio, exit the courthouse on April 19, 2007, after the former Qwest CEO was convicted of insider trading.

Photo by George Kochaniec Jr. / The Rocky/2007

Joe Nacchio, center, his wife, Anne Esker, and his son, Michael Nacchio, exit the courthouse on April 19, 2007, after the former Qwest CEO was convicted of insider trading.

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The full 10th Circuit Court of Appeals hears only a handful of cases every year. Government prosecutors hope the Joe Nacchio case will be among them.

Federal prosecutors on Wednesday asked the full court, which includes 12 active judges, to review the case of former Qwest CEO Nacchio. They want the court to affirm last spring's insider-trading conviction.

Last month, a three-judge panel of the 10th Circuit voted 2-1 to reverse the conviction and ordered a new trial.

The latest step by the government was expected but ensures that the legal process will drag on. Nacchio, meanwhile, remains free on $2 million bail.

"The government has an uphill battle" in getting the full appellate court to hear the case, said criminal defense attorney Jeralyn Merritt. She noted the court will hear only issues of "exceptional importance."

"On the other hand, the 10th Circuit (panel) has already ruled there should be a new trial, so this isn't the government's last bite of the apple," she said.

The divided appellate panel ruled that U.S. District Judge Edward Nottingham made an error during last year's trial by preventing defense witness Daniel Fischel from offering an economic analysis of Nacchio's stock sales.

In a 15-page petition, government attorneys wrote that the appellate panel's decision improperly restricts a judge's discretion to exclude "unsupported expert opinions and unnecessary economic commentary."

"A district judge must be given latitude to prevent parties from sponsoring 'economic theorists' who comment on the facts and spin . . . opinions that, in the district judge's evaluation, are already well within the jury's understanding," wrote Stephan Oestreicher, attorney for the Justice Department's criminal appellate section.

He also noted that the defense didn't disclose Fischel's methodology or show his reliability.

Nacchio's attorneys didn't reply to phone calls and e-mails for comment. Maureen Mahoney, Nacchio's appellate attorney, has previously said a retrial, if it occurs, would "establish beyond any doubt that Mr. Nacchio did not commit a crime."

Nacchio, 58, was convicted last spring of 19 counts of insider trading in connection with selling $52 million of stock in April and May 2001. He was sentenced to six years in prison, fined $19 million, and ordered to forfeit $52 million of stock proceeds.

Prosecutors charge that Nacchio knew but didn't tell investors that Denver-based Qwest was relying on one-time sales of capacity off its fiber-optic network to make its numbers.

The jury acquitted Nacchio of 23 counts related to stock sales in the first three months of 2001.

Marcy Glenn, chairwoman of the appellate practice group at Holland & Hart in Denver, said she wasn't surprised that the government has asked for a review by the full court. But she noted the 10th Circuit grants such petitions "quite infrequently."

Clerk of Court Elisabeth Shumaker said the full court typically hears only three to five cases a year.

"Has the government shown this is exceptional?" attorney Merritt asked.

The process will be done in two steps. First, the full court will decide whether to hear the case.

"When a court denies petitions for a rehearing, it typically occurs fairly quickly, within a month or so," Glenn said.

If the court is considering granting the petition, it will request a response by Nacchio's defense team and that will delay the decision. "It could be that in a case of this prominence, it will request a response regardless," Glenn said.

If the court decides to hear the case, it likely will schedule oral arguments, she said. That could add a number of months to the process.

Then it could be months after that before the court makes its ruling.

Although there are 12 active judges, a smaller number might hear the case, depending on conflicts that would disqualify a judge.

Merritt said she believes time favors Nacchio, who also faces civil-fraud charges, especially if the criminal case eventually is retried.

"As time goes on, events fade, witness memories get weaker," she said. "One thing you do on cross-examination is test the memory of the witness."

But she added: "It's going to be expensive for Joe Nacchio, one way or the other."

Or for Qwest Communications - which likely would have to bear the cost of a second trial.

smithje@RockyMountainNews.com or 303-954-5155

Seeking review

* Government's petition Wednesday: Asked the full 10th Circuit Court of Appeals to review the Joe Nacchio case and affirm the insider-trading conviction against the former Qwest CEO.

* What a three-judge appellate panel decided in March (by 2-1 vote): Nacchio should get a new trial because U.S. District Judge Edward Nottingham improperly excluded expert testimony by a defense witness.

* Government's argument: Nottingham had discretion to exclude "unsupported expert opinions and unnecessary economic commentary."

* What's Next: The full appellate court will decide whether to hear the case. The court generally rejects such petitions within a month or so. It typically hears only a handful of cases a year and only if a question involves one of "exceptional importance" or to maintain uniformity of the court's decisions. If it agrees to hear the case, it likely will schedule oral arguments, and the process will go on for months.

Comments

  • April 30, 2008

    1:32 p.m.

    Suggest removal

    holekeeper writes:

    I hope this guy burns!!!

  • April 30, 2008

    1:33 p.m.

    Suggest removal

    POHA writes:

    Lock him up!

  • April 30, 2008

    2:12 p.m.

    Suggest removal

    Seabreezes writes:

    He's a rich, well-connected white man. He ain't going to jail. Justice for all my b*tt.

  • April 30, 2008

    2:27 p.m.

    Suggest removal

    Steph writes:

    I wish they'd string him up like in the old days. He literally stole $17,000 of my 401K and I was one of the lucky ones. I know people who lost $100,000+.

  • April 30, 2008

    2:38 p.m.

    Suggest removal

    steve00 writes:

    Hey, Seabreezes, there was a great Chappele show about the different legal systems people get depending if they're rich and white or poor and black. Love to see Nacchio get the poor, black legal system. He'd be locked up and somebody's b*tch by now.

  • April 30, 2008

    2:55 p.m.

    Suggest removal

    Seabreezes writes:

    steve, I saw that episode. Chris Rock said the same thing...if OJ had been poor, he'd be Orenthal the bus driving killer, not "the Juice". If Joe Nacchio were poor, he'd be Cell Block A's plate of Nachos.

  • April 30, 2008

    10:58 p.m.

    Suggest removal

    jacka writes:

    US Attorny Eid does it right, ride Nachhio like the bit_h he is. Ya know, tune him up for general population.

  • May 1, 2008

    9:15 a.m.

    Suggest removal

    pwern writes:

    Yeah, the guy belongs in jail because the stock market should only go up, right? And so should home prices. All you idiots complaining about losing money in Qwest stock are probably the same morons who are now complaining about your subprime mortgage rate reset.

    News Flash: MARKETS MOVE BOTH WAYS.

    This guy is a sacrificial lamb for the entire telecom bust. Anybody who was investing in this sector (or the dot.com bubble for that matter) DESERVED to lose money. The fact this guy had the brains to recognize the coming telecom blowout and sell his stock ahead of the market crash makes him a folk hero in my book, not a criminal.

  • May 1, 2008

    5:23 p.m.

    Suggest removal

    jce44 writes:

    News Flash pwern,... Some of us were THERE. And as a manager of the business, were required to annually test, and pass, based on info about what was "right" and wrong business practices... and we KNEW then, what Nacchio was doing, was not only wrong for the company's health, but morally wrong. Yeah, we all did, and should have, taken a hit when the market downslided, but not like we had to take it in the shorts at Qwest. We couldn't sell, weren't allowed to, and our savings plan was MATCHED with Qwest stock...

    Having worked my carreer through Mountain Bell, U S West, then to be sold out by Trujillo to Qwest, with Nacchio at the helm... We all didn't mind adding the fiber routes to our local commitment, we just knew that he was selling the bandwidth twice! He's an egotistical, narcissist, with only himself to blame, and thousands of employees to help blame him.

    If he doesn't rot in prison, he will rot in hell.

  • May 12, 2008

    11:41 a.m.

    Suggest removal

    Ztliano writes:

    I feel like eating some Nachos.

  • June 20, 2008

    12:11 p.m.

    Suggest removal

    BlaqueScorpio writes:

    I was one of the 4,400 people laid off from Qwest when all of this started happening and I personally had a hard time getting back on my feet during this period. I mean he really messed up my life with the decisions he made.