DENVER—Federal prosecutors have asked an appeals court to deny bond for Joe Nacchio, saying the former head of Qwest Communications was fully aware he used inside information when he illegally sold $52 million worth of stock.
In a 26-page brief filed this week, government attorneys reiterated much of the evidence they presented at trial against Nacchio, who is facing a six-year prison term unless the 10th U.S. Circuit Court of Appeals overturns a district judge’s decision and orders bond to be granted pending the outcome of his appeal.
“As Nacchio still fails to grasp, this prosecution was not about whether Qwest had a duty to revise its public guidance but whether Nacchio traded on inside information that would lead a reasonable investor to buy or sell,” wrote Justice Department attorney Stephan Oestreicher Jr.
Nacchio was sentenced last month to prison and ordered to pay $71 million in asset forfeiture and fines after he was convicted in April of 19 insider trading counts.
A jury concluded Nacchio sold the stock in April and May 2001 when he knew the Denver-based telecommunications company was facing financial risk but didn’t tell investors.
His attorneys plan to raise several issues on appeal, including jury instructions, the exclusion of a defense witness’ testimony and U.S. District Judge Edward Nottingham’s decisions related to classified information about Qwest’s business dealings with the government.
During the July 27 sentencing, Nottingham rejected the appeal issues as reasons to allow Nacchio to remain free on bail. Prosecutors supported that decision in this week’s appeals court brief.
U.S. Bureau of Prisons spokeswoman Felicia Ponce said Wednesday she could not comment on Nacchio’s situation, citing security concerns. Nacchio was ordered to begin his term within 15 days after the bureau designates a facility.
In a related case, Nacchio and four other ex-executives of Qwest Communications International Inc. are named in a civil fraud lawsuit filed by the Securities and Exchange Commission. The SEC case is not expected to be set for trial until 2009.
