WASHINGTON – LAWFUEL – The Law Newswire – Joseph P. Nacchio, 57, the former chief executive officer of Qwest Communications International Inc., was sentenced to 6 years in prison for insider trading, the Justice Department announced today.
Chief U.S. District Judge Edward Nottingham also ordered Nacchio to pay over $52 million in restitution that will be distributed to the victims of his crime. In addition, Chief Judge Nottingham ordered the defendant to pay a $19 million fine and serve two years of supervised release. Nacchio is to report to a facility designated by the US Bureau of Prisons
On April 19, 2007, a federal jury convicted Nacchio of 19 counts of insider trading, covering $52 million in stock sales. The conviction came after 15 days at trial and six days of deliberation.
“Today’s prison sentence of 72 months holds Mr. Nacchio accountable for lining his pockets at the expense of investors,” said Assistant Attorney General Alice S. Fisher. “The Justice Department will continue to pursue corporate fraud cases to ensure the integrity and transparency of our financial marketplace.”
“In an age of cynicism, justice can still prevail and even inspire,” said U.S. Attorney Troy A. Eid of the District of Colorado. “This is one of those moments.”
“The FBI takes its vow to protect the integrity of the stock market and those who invest very seriously,” said FBI Acting Special Agent in Charge Cory Nelson. “We believe the punishment imposed today reflects not only the dedication of the agents and the prosecution team to bring this case to a conclusion.”
Nacchio served as Qwest’s chief executive officer and was a member of the company’s board of directors from about January 1997 through June 2002. According to the indictment, Nacchio sold Qwest stock from January to September 2001 when he knew, but did not disclose publicly, that Qwest was unlikely to continue to meet its publicly announced earnings targets as that year progressed. Federal law prohibits corporate insiders, such as officers or directors, from trading on material information regarding the company’s stock that has not been publicly disclosed. In particular, the indictment states that Nacchio knew that Qwest’s 2001 financial targets were overly aggressive, that Qwest did not have a good track record in growing recurring revenue, that the company’s business units were underperforming, and that there would be insufficient non-recurring revenue sources to close the gap between Qwest’s publicly stated financial targets and its actual performance. It further states that Nacchio was specifically warned about this information.
The Nacchio investigation was conducted by the FBI and the U.S. Postal Inspection Service. The case was prosecuted by First Assistant U.S. Attorney Cliff Stricklin and Assistant U.S. Attorneys James Hearty and Kevin Traskos of the District of Colorado, and Senior Litigation Counsel Colleen Conry and Trial Attorney Leo Wise from the Criminal Division’s Fraud Section at the U.S. Department of Justice in Washington, D.C.