A month after being indicted with illegal insider trading, former Qwest chief executive Joe Nacchio orchestrated a lucrative buyout for his investment in a New Jersey phone company when the head of the firm asked him to leave the board.
In addition to cutting ties with the firm, Nacchio has lessened his overall business workload and focused more efforts on his criminal case since the December 2005 indictment, according to interviews and court records. He has likely spent much of his time in three cities:
Nacchio, 57, has pleaded not guilty to charges that he sold $100.8 million in Qwest stock in early 2001 while he knew the company’s finances were faltering. If convicted, he faces a maximum penalty of 10 years in prison and a $1 million fine on each of the 42 counts. The trial, set to begin March 19 in U.S. District Court in Denver, could last almost two months.
“This case has enough importance to him, I think, that he had better drop a lot of things to make sure that he moves forward,” U.S. District Judge Edward Nottingham told Nacchio’s attorneys during a hearing in August.
Nacchio’s lead attorney, Herbert Stern, responded, “Absolutely.”
Stern, based in New Jersey, and Nacchio’s top local attorney, John Richilano, declined interview requests.
After his ouster from Qwest in June 2002, Nacchio remained active in business dealings. He purchased a stake in Bedminster, N.J.-based BCN Telecom and joined the company’s board after his one-year noncompete agreement with Qwest expired. Nacchio also served as a consultant to Leucadia International, advising the company in its efforts to acquire MCI in mid-2004.
“He was still considered to be a mover and shaker in the industry,” said Dick Boudria, founder and chief executive of privately held BCN.
However, after more news about investigations into Nacchio and Qwest surfaced in the summer of 2005, Boudria said he asked Nacchio to sell his stake in BCN and step off the board.
“I just felt that the company would be better served by not being affiliated with him,” said Boudria, a longtime business associate and family friend. “He was becoming more and more preoccupied with the challenges that faced him.”
BCN – which stands for Better Communications Now – has 50 full-time employees, about 400 sales representatives nationwide and annual revenue of more than $40 million.
Though he ultimately agreed to sell his stake in BCN after the criminal indictment, Nacchio played hardball with Boudria before doing so.
“Joe can be a very demanding business person,” Boudria said.
Nacchio and a group of investors sold their 36 percent stake to Boudria in January 2006.
“He did very well,” Boudria said, declining to disclose specific figures. “It was a very advantageous transaction for him.”
Nacchio also agreed to resign from BCN’s board, a post he had held since December 2003.
Low profile in Florida
Boudria no longer speaks with Nacchio, but keeps in contact with his family. BCN still employs Nacchio’s brother, Rich, as an attorney specializing in regulatory matters. “He’s been spending a lot of time in Florida,” Boudria said of the former Qwest chief executive. “He’s rather busy preparing for his upcoming trial.”
The European-style, 12,000 square-foot villa in Admirals Cove, a gated community in Jupiter, was purchased by Nacchio’s wife, according to property records. The 976-acre community features more than 5 miles of secluded waterway and 24-hour water and land patrol.
He is keeping a low profile in the town, located north of West Palm Beach. It has about 40,000 residents and has been home to celebrities such as Celine Dion and Burt Reynolds.
Nacchio doesn’t serve on any public boards or committees. His next-door neighbor, Flora Domenica, hasn’t seen him since he bought the home in the summer of 2005.
“It’s not like a neighborhood that you know everybody and see everybody,” Domenica said.
She’s only seen his wife a few times and spoke with her once.
“She looked like a nice lady,” Domenica said.
Nacchio has also maintained a low profile in his hometown of Mendham. Township administrator Stephen Mountain said Mendham is a close-knit community of about 5,600 people, but he has never heard of Nacchio. The local paper, the Observer-Tribune, has published only one story about Nacchio’s criminal case, which ran after he was indicted, said editor Phil Garber.
“I do not keep in touch with him,” said Nacchio’s former spokeswoman Marcia Horowitz, who works in New York. “But we certainly wish him well during the course of the trial.”
Nacchio’s mother, Carmela, who lives about 20 minutes from his home in Mendham, declined to comment.
“I have nothing to say about him,” she said. Since his indictment, Nacchio has also made trips to Washington to review classified documents connected to his defense.
Nacchio’s attorneys have said they want to use classified information to argue that Nacchio had a positive outlook for Qwest in early 2001 because he knew the company was in line to receive large top-secret government contracts. Some of the evidence related to that defense can only be reviewed in a highly secure location called a Sensitive Compartmented Information Facility. According to a November 2002 Director of Central Intelligence Directive, such facilities are required to feature, among other things:Vault doors, motion-detection sensors and alarms, walls, floors and ceilings with a minimum thickness of 8 inches of concrete, and reinforced on the inside with a steel plate that is thicker than an eighth of an inch.
Also, there’s an intrusion-detection system connected to a remote-monitoring station.
SCIFs in Denver and Washington have been designated for use during the case. Court filings suggest that Nacchio and attorneys from his lead law firm, Roseland, N.J.-based Stern & Kilcullen, have traveled to a Washington SCIF to review classified documents.
“Because of the requirements of the situation, in effect, we have to all rendezvous in Washington to do it,” Stern said about the process of reviewing top-secret information during a March hearing.
Washington is also where Nacchio’s son Michael was attacked in November 2005, an incident that likely has consumed some of Nacchio’s time since his criminal indictment.
According to a report in The Hoya, Georgetown University’s student newspaper, a man cut Michael Nacchio’s right arm and bicep with a switchblade after asking him for directions around 4:15 a.m. The younger Nacchio was able to fend off the attacker and filed a police report afterward. He spoke out about the safety of the campus during a town-hall meeting last February.
“I’m afraid that next time it’s going to be murder,” said Michael Nacchio, who’s listed as a 2006 graduate.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
This article has been corrected in this online archive. Originally, due to a reporting error, it misstated how long Joe Nacchio has owned a home in Mendham, N.J. He has owned the home since April 1995.
