Nov 14, 2005 11:36 pm US/Mountain
Jury Deciding Whether To Indict Qwest's Nacchio
by Rick Sallinger
DENVER (CBS4) ―
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Joe Nacchio was CEO of Qwest from 1999 to 2001.
CBS4
A federal grand jury may soon decide whether to indict former Qwest CEO Joe Nacchio who was in charge from 1999 to 2001.
The grand jury is meeting again this week in what has been a three year long investigation into Qwest's accounting practices.
Nacchio was the CEO for Qwest when its stock was flying high.
"The spirit of insider trading laws is that everybody has to be on the same playing field," said Bruce Allen, CBS4 financial expert. "You do, I do, Martha Stewart, everybody is on the same level playing field and so nobody can trade on information that's not publicly released."
Currently, Nacchio's sale of Qwest stock during April and May of 2001, netting him $42 million in profits, is under scrutiny.
In 2001, the stock was riding high, but then it began to plunge.
"It collapsed. It was trading between the mid 30s and low 40s and went all the way down to
11 and a half by November of that year," Allen said.
A lot of people lost money including former Qwest employee Paula Smith, who testified before a congressional committee.
"We wanted to believe in the honesty of our CEO and the company to which we have given so many years," Smith told a congressional committee.
It turns out Qwest was trading capacity on its fiber optic lines with other companies and booking it as revenue.
It eventually restated billions of dollars from its accounting reports and former Chief Financial Officer, Robin Szeliga, pleaded guilty to insider trading charges.
If Nacchio is indicted, Szeliga could be a key witness against him.
Nacchio's attorney has repeatedly denied that his client was involved in any wrongdoing.
Previously, two mid-level Qwest executives pleaded guilty, two others were acquitted and another is still awaiting trial in a separate case.
(Copyright © MMV CBS Television Stations, Inc.)
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