Judge plans to announce former Qwest CEO’s new sentence Thursday; maybe less time, lower fine

Former Qwest CEO to get new sentence Thursday

DENVER — Prosecutors on Thursday asked a judge to add six months to former Qwest CEO Joseph Nacchio’s sentence for insider trading, while Nacchio’s lawyers requested a prison term at least 18 months shorter than the original.

U.S. District Judge Marcia Krieger was expected to announce her decision Thursday afternoon. Already, Nacchio’s attorneys have noted objections to parts of the resentencing hearing that started Tuesday, indicating there could be an appeal.

Nacchio was sentenced in 2007 to six years in prison and was ordered to forfeit $52 million and pay $19 million in fines. Prosecutors say he sold $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.

The 10th U.S. Circuit Court of Appeals ruled last year that Nacchio’s sentence should be recalculated to focus on how much of his profits were due to him having insider information.

Nacchio, who started serving his prison sentence last year in Pennsylvania, waived his right to attend the re-sentencing hearing.

On Thursday, Krieger announced a new calculation that wasn’t that far from the gain of $28 million that the trial judge found. Krieger said it appeared the gain was $23 million to $32 million. Under advisory federal guidelines, she said, she could sentence Nacchio to up to 6½ years in prison, 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 used his position to pump up Qwest’s stock when he was selling his own shares, Hearty said.

When a chief executive of a large public company chooses to abuse 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 sentence of 3½ to 4½ years in prison.

“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 and led 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.