Appeals court orders new trial for Nacchio

Former Qwest CEO gets new trial because of excluded important testimony

	Former chief executive officer of Qwest Communications Joe Nacchio, with his wife, Anne Esker.
David Zalubowski / AP file

updated 8:09 p.m. ET March 17, 2008

DENVER - A federal appeals court ordered a new trial Monday for former Qwest CEO Joe Nacchio, saying the trial judge wrongly excluded expert testimony important to Nacchio’s defense in his insider trading case.

The court also ordered a new judge to hear Nacchio’s case.

Nacchio was convicted in April on 19 counts involving the sale of $52 million worth of Qwest stock in 2001. He was sentenced to six years in prison but remained free on appeal. Jurors acquitted Nacchio of 23 counts.

Story continues below ↓

Prosecutors argued Nacchio sold the stock when he knew Denver-based Qwest Communications International Inc. was at financial risk but didn’t tell investors. U.S. Attorney Troy Eid had called the case the largest insider trading prosecution in the nation based on the number of counts, the amount of money involved and the length of the prison term.

“This is a setback, not a defeat,” Eid said in a statement Monday. “The good news is the circuit court said our trial team presented sufficient evidence to convict Mr. Nacchio of insider trading.”

Nacchio attorney Maureen Mahoney in a statement said: “If the government decides to retry the case, we expect him to be acquitted.”

Attorneys for Nacchio told the 10th U.S. Circuit Court of Appeals in December the case against him didn’t meet standards set by previous court rulings. Mahoney also told the court that U.S. District Court Judge Edward Nottingham wrongly prevented defense witness Daniel Fischel from testifying.

The appeals court rejected Mahoney’s argument that Nottingham’s instructions to the jury were inadequate. It also rejected an argument that the government failed to introduce sufficient evidence to convict Nacchio, which if true would have meant Nacchio could not have been retried under the double jeopardy clause.

At the appeals hearing, the judges repeatedly asked government prosecutor Stephan Oestreicher Jr. why Nottingham denied Fischel from testifying.

Nacchio’s attorneys say Fischel, an expert on corporate law and markets, was a core part of his defense and could have explained to jurors what must be publicly disclosed and that Nacchio’s stock sales were to diversify his portfolio. Mahoney said a reasonable jury hearing testimony from Fischel would have acquitted Nacchio.

Prosecutors say the defense didn’t establish the reliability of Fischel’s opinions or disclose how he arrived at them.

The three-judge appeals panel focused on how Nottingham simply announced his decision to forbid Fischel from testifying after accepting written arguments from both sides. Two members of the panel noted how Nottingham silenced a defense attorney who asked to speak, saying he had already ruled because the defense didn’t disclose Fischel’s methodology.

CONTINUED: Concern stock would be “whacked”

1 | 2 | Next >