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Whats next with ex-Qwest Communications International CEO Joseph Nacchio?
By Amarendra Bhushan for CEOWORLD Magazine Updated:August 18, 2009
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U.S. prosecutors said they will not appeal a ruling likely to result in a reduced prison term for former Qwest Communications International Inc Chief Executive Joseph Nacchio.
He was convicted in 2007 of 19 counts of insider trading.
Nacchio was one of several executives convicted as part of a government crackdown on white-collar crime stemming from major accounting fraud earlier this decade at companies like Enron and Worldcom.
He is at the minimum-security Federal Correctional Institution Schuylkill satellite camp in Minersville, Pa.
Prosecutors said Nacchio gained $44 million, while the court for sentencing purposes took the prosecutors’ figure and subtracted $16 million for taxes. His six-year sentence was based on an alleged profit of $28 million.
Nacchio’s attorneys argued that the former CEO is being punished for the price increase of Qwest stock from 1997, and his actual profit would have been $1.8 million, capping his prison sentence at 4 years and three months.
The appeals court agreed with Nacchio’s lawyers that the $52 million figure was too high. Instead, the judges wrote, the figure used should have been Nacchio’s net profit resulting from illegal insider trading. They said Nacchio’s gain should be calculated “in a manner that is more narrowly focused on producing a figure that reflects, in at least approximate terms, the proceeds related to his criminally culpable conduct.”
The Justice Department could have asked the judges to reconsider the decision or asked the full appeals court to rule. The judges didn’t say what Nacchio’s sentence should be. The matter will return to U.S. District Court in Denver for a decision.
Nacchio’s lawyer, Herb Stern, didn’t immediately return a phone call or e-mail after business hours seeking comment.
Nacchio was convicted in 2007 on 19 counts of insider trading connected to his sale of $52 million in Qwest stock. He has appealed his conviction to the Supreme Court but was ordered to begin serving his prison term in April.
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