DENVER-
Former Qwest CEO Joe Nacchio’s attorneys asked a federal judge Thursday for more details on how the prospective jury pool was selected, saying they need the information to prepare a motion seeking a new trial on his insider trading conviction.
In a separate motion filed Thursday, prosecutors argued that Nacchio should be required to forfeit $52 million, the gross amount he earned on 19 stock sales in April and May of 2001 that a jury last week concluded were illegal.
The motions, filed in anticipation of Nacchio’s sentencing in late July, came on the same day a judge ruled a civil fraud case against Nacchio should proceed.
Defense attorneys began laying the groundwork for the new trial motion by asking for permission to see responses to questionnaires sent early this year to 1,000 prospective jurors. The jury that decided Nacchio’s case consisted of eight men and four women selected from 78 candidates called to court.
Defense attorney Herbert Stern noted U.S. District Judge Edward Nottingham has never explained how the 78 prospects were selected and suggested an error may have occurred.
Nottingham ordered the questionnaire to be sent to potential jurors so those with a known bias—such as Qwest employees or shareholders—could be excluded. He did not share the jurors’ responses with attorneys and decided on his own whether to excuse any of the 1,000 candidates.
Although he initially agreed to send a second questionnaire seeking additional details, Nottingham later said those questions should be asked during the selection process when an individual’s demeanor could be judged in person.
During a March 1 meeting in his chambers, Nottingham said he thought jurors with distant relatives who owned stock likely would be able to serve, Stern said.
Stern objected to the single questionnaire and the automatic exclusion of prospective jurors who had a prior employment, business or financial relationship with either Qwest or U S West Inc.
“The court’s pretrial method for winnowing the venire from 1,000 to 78 may be error that warrants the grant of a new trial,” Stern wrote. “It will not be until we have an opportunity to analyze the court’s pretrial actions that we will be able to determine whether error was committed.”
Prosecutors charged Nacchio with 42 counts of insider trading, alleging he based $101 million in stock sales from January to May 2001 on inside information that Denver-based Qwest Communications International Inc. was at financial risk but didn’t tell investors.
The jury acquitted Nacchio of 23 counts but convicted him of 19 for sales occurring after Qwest’s first-quarter results were posted but the company did not reveal how much of its revenue was based on one-time sales.
In the government’s filing, prosecutor Kevin Traskos argued that the law requires Nacchio to forfeit $52 million earned on the April and May 2001 sales. “Because this information is derived directly from the trade confirmations, the United States expects that this calculation of the amount of the gross proceeds should be undisputed,” he wrote.
The case grew out of a multibillion-dollar scandal that forced Qwest, a primary telephone service provider in 14 states, to restate $2.2 billion of revenue.
Federal regulators have said Qwest falsely reported fiber-optic capacity sales as recurring instead of one-time revenue between April 1999 and March 2002, a practice that allowed it to improperly report about $3 billion in revenue.
Nottingham has set Nacchio’s sentencing July 27. Each count carries a sentence of up to 10 years in prison and a $1 million fine, but legal analysts have speculated he will get a prison term of eight years to 10 years.
Nacchio also is one of several former Qwest executives named in a pending lawsuit filed by the Securities and Exchange Commission accusing them of orchestrating a financial fraud at Qwest.
