Much like his criminal case, Joe Nacchio’s national security defense is threatening to bog down and place a cloud of secrecy over a civil fraud case pending against the former Qwest chief executive and several other former company officials.
Nacchio’s attorney Jeff Speiser said during a 30-minute hearing today in Denver federal court that a request two months ago for information from four government agencies has gone unanswered.
A Justice Department attorney said the information is classified and asked Magistrate Judge Craig Shaffer for 90 days to determine what it can release.
Shaffer rejected the request, setting a Nov. 19 deadline.
“This case has to move forward,” Shaffer said.
The Securities and Exchange Commission alleges Nacchio and his former subordinates fraudulently booked $3 billion in revenue from 1999 to 2002. Qwest later restated much of that revenue.
The lawsuit was filed in March 2005, and the earliest it will go to trial is 2009, if at all.
Other defendants in the case include former president Afshin Mohebbi, former chief financial officer Robert Woodruff and former accountants James Kozlowski and Frank Noyes.
As part of his national security defense, Nacchio contends he was privy to top-secret information beginning in 1997 that led him to believe Qwest would receive hundreds of millions in government contracts.
This strategy was raised during Nacchio’s criminal insider trading case, but much of the defense went unheard during the monthlong trial. Nacchio was convicted in April on 19 counts of insider trading connected to his sale of $52 million in Qwest stock and was later sentenced to six years in prison. He remains free on $2 million bond pending his appeal.
Federal Judge Edward Nottingham held more than a half-dozen closed-door pretrial hearings in the criminal case to deal with Nacchio’s national security defense.
The defense may be relevant to charges in the SEC suit that Nacchio and Woodruff publicly set unrealistic financial targets to keep Qwest’s stock price up so it could complete is June 2000 merger with US West. Nacchio may argue the projections were legitimate because he had access to top-secret information that indicated Qwest was in line to receive lucrative government contracts.
Speiser said today his team may seek to depose 20 people — whose names he can’t even reveal — as part of the national security defense.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
