A judge ordered prosecutors Tuesday to turn over a note outlining how Qwest’s former chief financial officer will testify in the upcoming criminal insider-trading trial of former chief executive Joe Nacchio.
The two-page note contains statements by an attorney for former CFO Robin Szeliga detailing what she will say if called to the stand.
Szeliga will testify that Qwest misled analysts and investors in early 2001 by not disclosing its reliance on one-time network deals to meet its forecast revenues, according to a redacted version of the note filed by Nacchio’s attorneys in October.
Nacchio’s trial on 42 counts of criminal insider trading begins March 19. If convicted, he faces a maximum jail sentence of 10 years and fines of $1 million for each count. Nacchio has pleaded not guilty.
The government accuses Nacchio of selling $100.8 million in Qwest shares from January to May 2001 when he allegedly knew the company’s finances were in worse shape than he disclosed publicly.
The government is required to turn over to Nacchio’s attorneys evidence that might benefit his defense.
U.S. District Judge Edward Nottingham’s decision Tuesday was only a partial victory for Nacchio. He allowed the government to withhold other documents, including notes from interviews with other witnesses and reports of presentence investigations of four individuals who have pleaded guilty in related cases and may testify against Nacchio.
Szeliga pleaded guilty to one count of insider trading in June 2005 and was sentenced last year to two years’ probation, six months of home detention and a $250,000 fine. She agreed to testify for the government in Nacchio’s trial.
Also, former Qwest executives Marc Weisberg, Thom as Hall and Grant Graham have pleaded guilty to fraud-related criminal charges and could testify against Nacchio.
Defense claims changes
Nacchio’s attorneys have said the government is holding back documents that might help in his defense. In an October filing, they said Szeliga gave the government different stories in two statements in 2004 and 2005.
“Witness statements in this case have evolved over time and been misconstrued in government agent reports,” they wrote.
The government has already produced a redacted copy of the statement by Szeliga’s attorney that Nottingham ordered Tuesday to be turned over in full.
In the document dated Feb. 9, 2005, Szeliga attorney Vince Marella lists points of his client’s potential testimony, including:
Qwest “did not adequately disclose the financial condition of the company” during its analyst calls for the first and second quarters of 2001. Specifically, the company did not disclose that one-time network- capacity swaps “were a significant driver of growth.”
Because of that, “the public could not assess the extent to which (capacity swaps) attributed to Qwest making its numbers for the quarter” or “the level of risk of Qwest meeting its future projections.”
“Nacchio would do whatever he had to do to prop up the stock price.”
Szeliga “saw Joe resist, manipulate and delay (capacity swap) disclosure until August 15,” three months after prosecutors say he stopped selling his stock.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
