Nacchio Update: The Jury's Out
Nacchio's defense rested its case earlier this week after calling only three witnesses, none of which was the former CEO himself. The defense called Qwest founder Philip Anschutz and Abbot Giles Hayes as character witnesses last week, and brought legal expert and private consultant Daniel Fischel to the stand on Monday.
According to news reports, Anschutz testified about hiring Nacchio and also recounted a January 2001 meeting in which he attempted to dissuade Nacchio from resigning after his son's suicide attempt. Anschutz called him "quite agitated" and "very emotional," in testimony designed to show the former CEO's state of mind at the time of the stock sales in question.
Defense attorneys stressed that his son's suicide attempt gave Nacchio a "perfect out," according to the Rocky Mountain News, and that if he believed Qwest was doomed to fail, he could have resigned and sold his vested Qwest shares at a profit.
"[Nacchio] was consumed with thoughts of family, not fraud," at the time prosecutors say he was making illegal trades, defense attorney John Richilano said.
Also taking the stand for the defense was Giles Hayes, Roman Catholic abbot and administrator of the private school Nacchio's children attended. According to the Denver Post, Hayes testified that Nacchio took a trip with him to eastern Kentucky in December 2000, at a time when the prosecution claims Qwest's then-president Afshin Mohebbi was leaving memos warning of company weakness on Nacchio's chair in Denver.
Finally, Northwestern University law professor Daniel Fischel gave summary testimony about Nacchio's stock sales during 2001. According to the Rocky Mountain News, Fischel attempted to show that Nacchio's sale of stock during the period in question was unusually low.
"The number, 33 percent for 2001, the year in which he is being accused of trading illegally, is lower than in any other year," he said.
During cross examination, however, Fischel admitted that Nacchio sold stock 3.5 times faster during the first four months of 2001 than during the same time period in 2000.
According to the Rocky Mountain News, Colleen Conry reminded the jury that Nacchio couldn't trade without disclosing financial information to the public, saying, "If you don't tell, you can't sell."
Conry used a series of charts illustrating what government witnesses testified that Nacchio knew and when, including when the former CEO made sales of Qwest stock.
Herbert Stern, who made closing arguments for the defense, argued that Nacchio exercised and sold his Qwest stock options because they would eventually expire.
According to the Rocky Mountain News, Stern also claimed that Nacchio's optimism may have done his company in, but stressed that setting aggressive targets for Qwest was not a crime.
"Maybe his business projections didn't come true," Stern said. "Maybe the same optimism, energy, drive, and ambition that built the company in the first place led him in the end to miscalculate what could be achieved in the terrible year of 2001. That may be true. But that is not a crime."
Nacchio is charged with 42 counts of insider trading, each of which carries a potential $1 million fine and 10 years in prison.
— Ryan Lawler, Reporter, Light Reading