Joseph Nacchio

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Joseph P. Nacchio (born June 22, 1949), in Brooklyn, New York, was chairman of the board and chief executive officer of Qwest Communications International from 1997 to 2002. He was convicted of 19 counts of insider trading in Qwest stock on April 19, 2007.[1] On July 27 2007, Joseph Nacchio was sentenced to six years in federal prison. Federal Judge Edward Nottingham also ordered Nacchio to pay a $19 million fine and forfeit $52 million he gained in illegal stock sales. As of October 15, 2007 he was free on bail, appealing his conviction on the basis that the U.S. government retaliated against Qwest for his refusal to give customer data to the National Security Agency. [2] On March 17, 2008, the U.S. Court of Appeals for the Tenth Circuit overturned his conviction on the basis of defense expert witness testimony that was improperly excluded, and ordered a new trial before a different trial judge. [3]

Contents

[edit] Biography

He is the son of a New York City longshoreman and bartender [4] and graduated in 1970 from New York University with a B.S. in Electrical Engineering. Later he earned an MBA from New York University and an Master's degree in Management (SM) as a Sloan Fellow from the MIT Sloan School of Management in 1986.[5]

[edit] Qwest

Nacchio joined Qwest in 1997 from AT&T[6].

While Chairman, Nacchio was serving on two federal advisory panels — the Network Reliability and Interoperability Council and the National Security Telecommunications Advisory Committee. He was Chairman of the latter and was given a top secret security clearance in the late 1990s.

During Nacchio's tenure as Qwest CEO, the company acquired US West.

Qwest stock began a sharp decline in May 2001, falling below $2 by August 2002. Nacchio resigned from Qwest in June 2002 amidst insider trading rumors and was replaced by former Ameritech CEO Richard Notebaert.

[edit] Insider trading, fraud

On March 15, 2005, Nacchio and six other former Qwest executives were sued by the U.S. Securities and Exchange Commission. They were accused of a "massive" $3 billion financial fraud between 1999 and 2002 and of benefiting from an inflated stock price.

In its case, the government stated that Nacchio continued to tell Wall Street that Qwest would be able to achieve aggressive revenue targets long after he knew that they could not be achieved. This helped it buy up regional phone rival US West, the government alleges[7]On his part, Nacchio maintains that he believed Qwest would soon be receiving several large government contracts. On November 21, 2005, The Wall Street Journal reported that Nacchio "believed Qwest was doing well because it was getting lucrative secret national-security-related work from the federal government." Nacchio claimed that he was not in a rightful state of mind when he sold his shares because of problems with his son, and the imminent announcement of a number of government contracts.

Nacchio was indicted on December 20, 2005 on insider trading charges in Denver, Colorado. He was forced to surrender his passport for fear that he would flee the country. The indictment against Nacchio charged him with 42 counts of insider trading. Each count carries a potential 10-year jail term and corresponds to a sale of Qwest shares, including a flurry in April-May 2001, when Nacchio sold almost $39 million in stock. At the time, Qwest was trading between $41.12 and $38.31.

Nacchio was convicted on 19 of 42 counts of insider trading case on April 19th, 2007[8]. He was released on on $2 million bond. On July 27 2007, Nacchio was sentenced to six years in federal prison. Federal Judge Edward Nottingham also ordered Nacchio to pay a $19 million fine and forfeit $52 million he gained in illegal stock sales. On March 17, 2008, the U.S. Court of Appeals for the Tenth Circuit overturned his conviction on the basis of defense expert witness testimony that was improperly excluded, and ordered a new trial before a different trial judge. Nacchio's lead defense attorney is Maureen Mahoney. [3]

[edit] See also

[edit] References

  1. ^ Ex-Chief at Qwest Found Guilty of Insider Trading By Dan Frosch, New York Times April 20, 2007
  2. ^ Searcey, Dionne; Evan Perez. "Nacchio Alleges Reprisal", The Wall Street Journal, Dow Jones & Company, 10-15-2007, pp. A14. Retrieved on 2007-10-15. 
  3. ^ a b http://www.nytimes.com/reuters/business/business-nacchio-trial.html
  4. ^ Ex-Chief at Qwest Found Guilty of Insider Trading By Dan Frosch, New York Times April 20, 2007
  5. ^ Rocky Mountain News Biographical Information
  6. ^ BBC NEWS | Business | Ex-Qwest boss faces fraud charges
  7. ^ BBC NEWS | Business | Ex-Qwest boss faces fraud charges
  8. ^ BBC NEWS | Business | Former Qwest boss guilty of fraud

[edit] External links