DENVER-
Jury deliberations began Thursday in Joe Nacchio’s insider trading trial following three weeks of testimony about what the one-time head of Qwest Communications may have known—and intended—when he sold $101 million worth of stock six years ago.
Jurors started their work shortly before noon after U.S. District Judge Edward Nottingham explained that jurors must unanimously agree that the defendant acted knowingly, willfully and intended to defraud in order to find him guilty.
“The good faith of the defendant is a complete defense,” Nottingham said. “An honest mistake in judgment does not rise to the level of a crime.”
After about five hours, the judge brought the jury back and recessed deliberations until Friday morning.
Nacchio, accompanied by his wife and a son, appeared upbeat but declined comment.
Nacchio is charged with 42 counts of insider trading for a series of stock sales he completed between January and May in 2001. Each count carries a penalty of up to 10 years in prison and a $1 million fine.
Prosecutors say Nacchio accelerated the sales after learning Qwest Communications International Inc. was facing what his business unit managers believed could be insurmountable challenges to achieve revenue projections.
They pointed to a document which committed Nacchio to selling shares in early 2001. They say the document was backdated from December 2000, when Nacchio received the financial warnings, to November 2000.
Defense attorneys told jurors that Nacchio believed Qwest would succeed in the wake of its 2000 acquisition of former Baby Bell U S West Inc.
Early Thursday afternoon, jurors requested a master list of evidence along with writing materials.
The case against Nacchio was filed as a result of the government’s investigation into an accounting scandal at Denver-based Qwest shortly after it acquired U S West, a primary telephone service provider in 14 mostly Western and midwestern states.
The Securities and Exchange Commission has said Qwest falsely reported fiber-optic capacity sales as recurring instead of one-time revenue between April 1999 and March 2002, which forced the company to restate $2.2 billion in revenue.
Nacchio told investors the company would generate double-digit growth in its first five years. In the fall of 2000, business unit managers began warning Nacchio the financial targets were too high and that they would have to rely on one-time transactions to meet revenue projections.
During closing arguments, Stern displayed financial data and memos and read witness testimony to counter allegations that Nacchio used information that investors didn’t have to get rich.
In his rebuttal, prosecutor Cliff Stricklin said Nacchio “chose to cheat in order to make a lot of money.”
“The only thing that stands between him and that money is you,” Stricklin said. “You have the power to set the standards of justice in this community.”
