DENVER—Former Qwest Communications chief Joe Nacchio should be required to forfeit $52 million when he is sentenced for insider trading, representing the gross proceeds he earned on illegal stock sales, prosecutors reiterated Tuesday.
In a brief filed in U.S. District Court, prosecutor Kevin T. Traskos argued against a defense recommendation that Nacchio should forfeit no more than $1.8 million, which excludes the taxes and other items Nacchio paid out of the gross proceeds.
“The statute does not support defendant’s presumption that Congress intended the forfeiture of gross proceeds only for crimes like drug running,” Traskos wrote.
“Criminal forfeiture is not focused on finding the exact amount that would make a crime a ‘wash’ for a defendant…neither profitable nor unprofitable,” he said. “The forfeiture statute should be interpreted in light of its primary purpose… punishment.”
Nacchio is scheduled to be sentenced July 27 after he was convicted of 19 counts of insider trading for transactions he completed in April and May of 2001 when he knew Qwest Communications International Inc. was at financial risk but he didn’t tell investors.
Prosecutors have recommended that Nacchio serve a maximum of seven years and three months in prison, be fined a maximum of $19 million and forfeit the gross proceeds of the illegal stock sales.
Defense attorney Herbert Stern has asked U.S. District Judge Edward Nottingham to impose an unspecified lesser sentence which he said was warranted because of the effect a lengthy prison term would have on the health of two of Nacchio’s family members.
Stern said the situation was explained in detail in a sealed report from the U.S. Department of Probation that was submitted to the judge.
Nacchio initially was charged with 42 counts of insider trading for $101 million worth of transactions between January and May 2001. A jury acquitted him of 23 counts but found him guilty on the other counts.
Nacchio remains free on bail pending the sentencing, and has said he will appeal the conviction.
Each insider trading count carries a penalty of up to 10 years in prison and a maximum $1 million fine but is adjusted under federal sentencing guidelines that take into account Nacchio’s actions which either made the situation worse or better.
Separately, Nacchio and several other one-time Qwest executives are still involved in a pending civil fraud lawsuit that accuses them of orchestrating a financial fraud that forced Qwest to restate $2.2 billion in revenue.
