Former Qwest CEO Joe Nacchio indicted on insider-trading charges
Tuesday, December 20th 2005, 12:15 pm
By: News On 6
DENVER (AP) _ Joseph Nacchio, who was chief executive of Qwest Communications during its multibillion-dollar accounting scandal, was indicted Tuesday on 42 counts of insider trading.
The indictment is the first criminal charge against Nacchio in the government's nearly 4-year-old investigation into accounting practices at Qwest Communications International Inc., the Denver-based primary telephone service provider in 14 states.
Nacchio, 56, was in custody and his initial court appearance was expected later Tuesday, said Jeff Dorschner, a spokesman for federal prosecutors.
In a statement released by his attorneys, Nacchio said he would plead not guilty ``with perfect confidence in his exoneration.''
``After many months of intense media attention and speculation, Joe Nacchio looks forward to vindicating his name in court,'' the attorneys said.
Nacchio already faces civil charges filed by the Securities and Exchange Commission and shareholder lawsuits.
The government has alleged in both civil and criminal cases that Qwest and some of its former executives participated in a massive financial fraud between April 1999 and March 2002 by falsely reporting sales or trades of capacity on its fiber-optic cables as recurring revenue. Nacchio resigned in June 2002 and has always said he did nothing improper.
The fraud allowed Qwest to improperly report approximately $3 billion in revenue that eased its 2000 acquisition of regional phone company U S West Inc., the government has said. Qwest later restated earnings from 2000 and 2001 to erase about $2.2 billion in revenue.
Federal prosecutors have lined up some of Nacchio's former colleagues to testify, including former Chief Financial Officer Robin Szeliga, who pleaded guilty to insider trading, and former sales executive Gregory Casey, who has settled SEC charges against him. Both agreed to cooperate.
In addition, former Qwest President Afshin Mohebbi has been granted immunity and is expected to testify. Mohebbi's attorney, Paul Grand, has said Mohebbi will not face criminal charges but declined further comment.
Szeliga pleaded guilty to a single count of insider trading stemming from a stock sale in April 2001 and reached a plea bargain in the SEC case. Two former midlevel managers also have agreed to cooperate as part of plea agreements in related criminal cases.
A former AT&T executive, Nacchio was hired to head Qwest in 1997 when it was installing fiber-optic networks along railroad rights-of-way. He attracted Wall Street's attention after engineering Qwest's acquisition of U S West but resigned under pressure about eight months before Qwest restated revenue for 2000 and 2001.