A federal judge on Thursday closed a hearing for the second time in the criminal insider-trading case of former Qwest chief executive Joe Nacchio to discuss classified information that may be presented during trial.
U.S. District Judge Edward Nottingham, against an objection from The Denver Post, also closed a portion of an August hearing for similar reasons.
Nacchio faces 42 counts of illegal insider trading, each carrying a maximum penalty of 10 years in prison and a $1 million fine.
Prosecutors allege Nacchio knew Qwest’s finances were faltering when he sold $100 million in Qwest stock in early 2001.
Nacchio’s attorneys have argued that he had a rosy outlook for Qwest at the time of those stock sales because he knew the company was in line to receive large government contracts. To show that, his attorneys have said they may need to introduce information that may affect national security.
Before departing Qwest in mid-2002, Nacchio served on two federal advisory panels dealing with national-security issues: the Network Reliability and Interoperability Council and the National Security Telecommunications Advisory Committee. However, he wasn’t nominated to serve on the latter panel until July 2001 – which is after the period when he allegedly made illegal insider trades.
Before closing Thursday’s hearing, Nottingham granted the prosecution’s motion to file two documents under seal. He also discussed jury instructions, indicating jurors will be told that the government, to win a conviction, must prove that Nacchio acted “willfully with the intent to defraud, manipulate and deceive.”
The closed portion of the hearing lasted more than three hours. Lead prosecutor Cliff Stricklin and Nacchio’s lead attorney Herbert Stern declined to comment afterward.
The trial is set for March 19 and could last up to eight weeks.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
