Judge cuts former Qwest CEO’s sentence by 2 months, reduces forfeiture by $7.4 millionBy Catherine Tsai, AP
Thursday, June 24, 2010
Former Qwest CEO’s sentence cut by 2 months, $7.4M
DENVER — A federal judge on Thursday cut former Qwest CEO Joseph Nacchio’s insider trading sentence by two months and reduced the amount of money he must forfeit by $7.4 million.
Nacchio was convicted of selling $52 million in Qwest Communications International Inc. stock in 2001 based on nonpublic information that Qwest was in danger of missing its sales forecasts that year.
Nacchio originally was sentenced in 2007 to six years in prison and was ordered to forfeit $52 million, but the 10th U.S. Circuit Court of Appeals ruled last year that the sentence should be recalculated to focus on how much of Nacchio’s profits actually came from having insider information.
The new sentence imposed by U.S. District Judge Marcia Krieger is five years and 10 months with a forfeiture of $44.6 million. Krieger left intact the original fine of $19 million.
Nacchio already has served 14 months in a prison in Pennsylvania. He waived his right to attend the re-sentencing hearing, which stretched over three days this week.
Krieger announced a new sentence range earlier Thursday based on a calculation that Nacchio’s gain was $23 million to $32 million — not far from the original $28 million that the trial judge found.
Krieger said that under federal guidelines, she could sentence Nacchio to up to 6½ years in prison based on the new calculation, but she also could consider other factors.
Assistant U.S. Attorney James Hearty suggested a sentence of 6½ years, a $19 million fine and forfeiture of $44 million. He argued that Nacchio didn’t give investors a clear picture of Qwest’s revenues, even when asked by investors and analysts, and that Nacchio used his position to pump up Qwest’s stock price when he was selling his own shares.
When a chief executive of a large public company abuses his position to “line his own pockets,” it undermines confidence in financial markets, Hearty said.
“This is the most aggressive type of insider trading case there can be,” Hearty said.
Nacchio’s attorney, Sean Berkowitz, countered that the executive believed in his company. He suggested a prison sentence of 3½ to 4½ years.
“He has lost practically everything except his family. He has suffered and continues to suffer a great deal,” Berkowitz told Krieger.
Berkowitz said Nacchio rose from working-class roots to lead Qwest’s growth from $240 million in revenue to $2 billion in revenue and was the center of his family.
Hearty agreed Nacchio was an “American success story” but said it appeared “extreme arrogance and greed” took over.