An April 20 Business article about the insider-trading trial of Joseph P. Nacchio incorrectly said that former Qwest Communications International president Afshin Mohebbi had pleaded guilty in the case. Mohebbi was not prosecuted. He was granted immunity by the government.
|Page 2 of 2 <|
Nacchio Guilty of Insider Trading
Prosecutors slashed witnesses and evidence from their case, offering jurors a lean presentation starring a few central witnesses. Among them: Qwest's former finance chief Robin Szeliga and former president and chief operating officer Afshin Mohebbi, both of whom pleaded guilty and agreed to cooperate with the government.
Szeliga and Mohebbi testified that they repeatedly told Nacchio in early 2001 that Qwest's public financial projections were vastly overhyped, to no avail.
The government accused Nacchio of ignoring the warnings, failing to inform shareholders of mounting problems and then selling millions in stock to protect his own interests.
Prosecutor Cliff Stricklin pointed the jury to a document suggesting that Nacchio had backdated one order to sell stock to take advantage of negative business forecasts he did not share with the public.
"If you don't tell, you can't sell," Colleen A. Conry, a Washington-based Justice Department prosecutor, told the jury in her closing argument.
By contrast, Nacchio's defense was bare-bones. Lawyer Herbert J. Stern questioned three witnesses, including Philip Anschutz, the reclusive billionaire and owner of the Examiner newspaper chain. Anschutz had chaired Qwest's board of directors. He told the jury that Nacchio's attention was elsewhere in early 2001 because of an alleged suicide attempt by his son.
Defense lawyers also called an expert in trading patterns, who testified that Nacchio sold a relatively small amount of his stock options in 2001. His financial adviser had urged Nacchio to diversify his holdings, the defense team argued.
The hard-charging Nacchio left Qwest under pressure in June 2002 after five years as chief executive, stepping aside from an empire he had created by merging the company with US West and slashing more than 11,000 jobs in the process.
Qwest eventually restated $2.5 billion in revenue and agreed to pay $650 million to settle civil charges lodged by the Securities and Exchange Commission. Nacchio still must contend with a civil SEC case against him.