Attorneys for Joe Nacchio asked a federal judge on Friday to dismiss 42 counts of illegal insider trading against the former Qwest chief executive, arguing that the government’s allegations are “vague and contingent.”
In a motion to dismiss, Nacchio’s attorneys said the government’s indictment fails to sufficiently allege a crime.
“It is not alleged that Mr. Nacchio knew Qwest could not make its numbers, or even that he believed Qwest would not make its numbers, but merely that he had been told that Qwest might not be able to make its numbers,” Nacchio attorneys Herbert Stern and John Richilano said. “The indictment is so vague as to lack constitutionally requisite sufficiency.”
Prosecutors allege that Nacchio sold $100.8 million in Qwest stock from January to May 2001, when he knew that the company’s publicly announced earnings targets were a “huge stretch” and couldn’t be met. In September of that year, Qwest lowered its targets, and the stock fell.
A spokesman for the U.S. attorney’s office in Denver declined to comment Friday on Nacchio’s motion.
Nacchio has pleaded not guilty. He is free on $2 million bond.
“Mr. Nacchio is not charged with possessing any material information that would restrain him from exercising and then selling his stock options,” Stern and Richilano said.
Additionally, they said, Qwest met its targets during the time he was making the trades in question.
“No insider can be guilty of a crime for trading in his company’s stock if the company has accurately disclosed all that the law requires it and him to disclose,” the lawyers said.
They also questioned the government’s demand that Nacchio return the $100.8 million, saying that it erred by not deducting from that amount the money he paid for the shares. They did not, however, provide a number for how much he paid.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
