DENVER—Former Qwest chief Joe Nacchio, convicted of criminal insider trading, asked a judge Monday to allow him to use secret government information in his defense of civil fraud allegations.
Nacchio argued in a U.S. District Court brief that the case should be dismissed if the government is allowed to withhold the documents under the protection of the state secrets and military privileges.
“The plaintiff in this case seeks to prevent the defendant from using information to defend himself on the grounds of privileges,” Nacchio attorney Herbert J. Stern wrote.
Similar motions asking the judge to reject the government’s request were filed by the other four former Qwest Communications International Inc. executives also named in the lawsuit.
Government prosecutors have asked U.S. District Judge Marcia Krieger to prevent the release of the classified documents to protect national security interests. At issue is material detailing Qwest’s business dealings with clandestine government agencies.
By law, classified documents must be withheld from the public eye to protect national security. Attorneys and defendants who are granted government security clearances may view the documents in secure facilities but the information cannot be made public.
The Securities and Exchange Commission sued Nacchio and the other four executives in 2005, alleging they coordinated a financial fraud that nearly sent Denver-based Qwest into bankruptcy.
The SEC has said their actions allowed Qwest to improperly report approximately $3 billion in revenue that helped seal its 2000 acquisition of former Baby Bell U S West. Qwest later restated $2.2 billion in revenue.
The SEC wants repayment and civil penalties with amounts to be determined at trial. No trial date has been set.
Other defendants are former finance chief Robert Woodruff, former President Afshin Mohebbi, and former accountants James Kozlowski and Frank T. Noyes.
In April, Nacchio was convicted in a separate criminal trial of 19 counts of insider trading stemming from the sale of $52 million worth of stock in 2001 at a time when he knew the company was at financial risk but didn’t tell investors.
During the months leading to his criminal conviction, Nacchio had said he was optimistic about Qwest’s future because he knew of potential contracts the company could land from the secret agencies. He did not present his argument during his trial.
Nacchio was sentenced to six years in prison but remains free on bond pending an appeal. The 10th U.S. Circuit Court of Appeals is scheduled to hear arguments next week on his appeal.
In his brief, Nacchio said he and his attorneys already had been granted clearance to view the documents which he believes are a key to his defense in the civil case.
He said the protective order sought by the government would prevent him from submitting in-court filings based on the information that he already knows.
