Denver – A magistrate today lifted most of the interview and evidence restrictions in a civil fraud case against former Qwest chief executive Joe Nacchio and others now that Nacchio’s criminal trial on insider trading charges is winding down.
In the civil case, federal regulators have accused Nacchio and other former executives of orchestrating a financial fraud that crippled the Denver-based company, a primary telephone service provider in 14 mostly Western states.
U.S. Magistrate Judge Craig Shaffer had imposed the limits to protect Nacchio’s right to a fair trial. The criminal trial is expected to be completed within a few weeks.
Kevin Traskos, one of the federal prosecutors handling the criminal case against Nacchio, told Shaffer during a two-hour hearing he did not expect any problems with attorneys in the civil case questioning witnesses once the jury begins its deliberations.
Shaffer set a series of deadlines for such items as evidence exchange and witness interviews and asked attorneys for both sides to meet by April 30 to discuss pending issues. Nacchio was excluded until the trial has been completed.
“There are people in this case that deserve to move forward with these issues,” Shaffer said.
The Securities and Exchange Commission accused seven former Qwest Communications International Inc. executives of committing fraud between April 1999 and March 2002. The SEC said the alleged fraud allowed Qwest to improperly report approximately $3 billion in revenue, a move that helped it acquire former Baby Bell U S West Inc. The company later restated the revenue.
The SEC is seeking repayment and civil penalties, with the amounts to be determined at trial. One defendant has reached a settlement with regulators. Two defendants, former finance chief Robin Szeliga and Gregory Casey, a former vice president of Qwest’s wholesale business unit, have settled with the SEC.
In addition to Nacchio, remaining defendants include former finance chief Robert Woodruff and former President Afshin Mohebbi.
Nacchio’s defense attorneys will continue presenting their case to jurors when the insider trading trial resumes Monday. They are required to tell prosecutors by Saturday evening whether Nacchio will testify in his own defense.
Nacchio is accused of selling $101 million worth of stock during the first five months of 2001 based on inside knowledge that Qwest was at financial risk and may not meet financial targets.
He is charged with 42 counts, each carrying a penalty of up to 10 years in prison and a $1 million fine.
Defense lawyers have said Nacchio sold the stock legally, believing at the time that the company was in good financial shape.
