The former CEO of Qwest, and a man many consider one of the biggest con artists behind the telecom bubble of the 1990s, is getting a retrial.
According to the AP, a U.S. appeals court granted Joseph Nacchio a new trial on Monday, reversing his April 2007 conviction on 19 counts of insider trading. A three-judge panel said the barring of Professor Daniel Fischel, a law professor at the University of Chicago, by a district court judge was grounds enough for a retrial. According to Infoworld, Nacchio's lawyers apparently wanted Fischel to testify about Nacchio's stock trading patterns. The court also ordered a new judge to hear Nacchio's case.
Last April, the former Quest chief was convicted on 19 of 42 counts of insider trading after the sale of 2.5 million shares in early 2001. Those shares were reportedly worth $52 million. Prosecutors said Nacchio sold these shares knowing that the company would have considerable trouble reaching its projected revenue goals. Rather than telling investors about these doubts, prosecutors said Nacchio kept reiterating that the company was sticking by its revenue targets. Sounds familiar, right?
When share prices eventually did plummet, thousands current and former Qwest employees lost money, in some cases their entire retirement savings.
Nacchio was later sentenced to six years in jail and ordered to pay back 71 million dollars. In 2005, the SEC also charged Nacchio and other Qwest executives with fraud, saying they misrepresented one-time sales of Qwest network capacity as recurring revenue in order to beef up the company's stock price.
In the end, Nacchio got off relatively easy compared to other disgraced executives -- at least in terms of jail time. Jeffrey Skilling, for instance, was sentenced 24-years in prison for his part in the Enron scandal, and WorldCom chief Bernard Ebbers was handed a 25-year sentence.
Reacting to Monday's decision, prosecutors described it as a "a setback not a defeat."
"The good news is the Circuit Court said our trial team presented sufficient evidence to convict Mr. Nacchio of insider-trading," U.S. Attorney Troy Eid said in a statement. "We're considering all our legal options in consultation with the Department of Justice."
