DENVER—Federal prosecutors said Monday that an appeals court should affirm Joe Nacchio’s insider trading convictions, arguing that the exclusion of an expert defense witness did not deprive the former Qwest CEO of a fair trial.
Prosecutors made their case in a filing to Denver’s 10th U.S. Circuit Court of Appeals, which agreed in July to review a decision that overturned Nacchio’s convictions on 19 insider trading counts.
Nacchio was accused of selling $52 million worth of Qwest Communications International stock at a time when he knew Qwest was at risk while other investors did not. Nacchio was convicted in April 2007 of the 19 counts and acquitted of 23 other counts. He was sentenced to six years in prison but remains free pending appeal.
A three-judge Appeals Court panel ordered a new trial in March, saying the trial judge improperly barred testimony from defense witness Daniel Fischel, an expert on corporate law and markets.
Nacchio’s attorneys have argued Fischel would have explained to jurors the legal requirements for public disclosure and that Nacchio’s sales of Qwest stock were to diversify his portfolio.
U.S. prosecutors said Fischel’s testimony would not have affected the outcome of Nacchio’s trial and offered an alternative to a new trial: A hearing on whether Fischel should have been allowed to testify.
Prosecutors had previously called a new trial “too drastic.”
Federal prosecutors have argued that defense attorneys failed to show Fischel’s reliability as an expert witness, despite having more than a year to prepare for trial.
“The defense listed some 20 witnesses before trial. It called almost none of them,” prosecutors wrote in Monday’s filing. “Instead, the defense told the jury that stock-price changes were not a science, and it rested on its lengthy cross-examination of the government’s witnesses.”
“Those strategic choices did not require the court to admit Fischel absent any showing of admissibility.”
A message left for Nacchio attorney Maureen Mahoney after business hours Monday was not immediately returned.
