The prosecution rested this past week in the insider trading case of former Qwest chief executive Joe Nacchio after painting a picture of greed and misbehavior in the executive suite. Defense attorneys have begun their effort to put Nacchio’s activities in a wholly innocent light. Jurors must sort through the testimony and evidence, and they are being treated, if that’s the word, to some of the ambiguities of capitalism.
What’s decidedly clear from testimony is the unsavory nature of the revenue games company officials played, hurting investors, employees and retirees and leading to the company’s near-collapse.
Former Qwest President Afshin Mohebbi told the court he wrote a memo to Nacchio calling the company’s financial projections a “huge stretch.” About the same time, Qwest’s investor-relations director Lee Wolfe was dumping stock because he knew Qwest was using “one-timers” to make projections. That’s the prosecution’s phrase for one-time injections of revenue that the company was secretly relying on to assure Wall Street of the company’s strength. Wolfe testified early in the trial that even though he knew it was wrong, he exercised and sold stock options at a pre-tax profit of $646,000.
Among those who suffered financially was Sally Anderson. The former Qwest employee told the court she upped her personal investment in company stock when Nacchio sent a companywide e-mail saying the company was raising its revenue and other targets. “I wanted my savings to grow with the company,” she said. Her investment soured when Qwest stock tanked.
Nacchio is accused of relying on insider information about Qwest’s deteriorating finances in deciding to sell off $100.8 million of stock. Whether or not prosecutors can prove the point, the Nacchio trial paints an unattractive picture of corporate guile by executives who abused the trust of investors.
