The U.S. Securities and Exchange Commission can begin requesting interviews, documents and other evidence from Joe Nacchio as part of its civil fraud case against the former Qwest chief executive and a handful of his one-time underlings, a magistrate judge ruled Thursday.
Much of the case in regards to Nacchio had been put on hold because of the Justice Department’s criminal case against him, which wrapped up last week with his conviction on 19 counts of illegal insider trading. He was acquitted on 23 other insider trading charges.
The Justice Department had been concerned that discovery in the civil case would impact the criminal case. Nacchio attorney Joel Silverstein on Thursday asked Magistrate Judge Craig Shaffer to continue the stay pending Nacchio’s appeal of the criminal conviction.
Shaffer denied the request, indicating that he didn’t want to give Nacchio a “blank check” to block all civil litigation.
The appeal of the criminal conviction could take two years.
“I am not going to stay civil discovery with respect to Mr. Nacchio,” Shaffer said during a hearing at the federal courthouse in Denver. “I would expect this case to move forward.”
If Nacchio’s attorneys file a formal motion to continue the stay, it could be continued pending a ruling on that motion, Shaffer said.
Nacchio was not at the hearing.
The SEC alleges in the March 2005 suit that former Qwest officials fraudulently boosted revenue by $3 billion from 1999 to 2002. Denver-based Qwest later restated much of that revenue.
Other defendants in the case are former Qwest president Afshin Mohebbi, former chief financial officer Robert Woodruff and former accountants Frank Noyes and James Kozlowski. The SEC has settled with several other former executives who also were sued, including former CFO Robin Szeliga.
The SEC wants the former officials to repay stock-sale profits and, in some cases, salaries earned from 1999 to 2002. It is seeking $216 million from Nacchio.
Nacchio is set to be sentenced in the criminal case July 27. He faces up to 10 years in prison and a $1 million fine on each of the 19 counts of illegal insider trading. He also may be ordered to forfeit $52 million in stock-sale proceeds.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
