Jan 24, 2006 12:37 am US/Mountain
Nacchio To Use Secret Contracts As Part Of Defense
by Rick Sallinger
DENVER (CBS4) ―
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Joe Nacchio faces charges on 42 counts of insider trading.
CBS4
Unsealed court documents revealed the former CEO of Qwest might claim he knew about business dealings with the federal government that he couldn't tell stockholders about.
Court documents in the case of Joe Nacchio were unsealed on Monday at the orders of a federal judge. Nacchio said secret contracts will be a key element to his defense in his upcoming trial where he faces charges on 42 counts of insider trading.
The government acknowledged that Qwest carried extremely sensitive national security information on its network, but it said the amount of revenue it provided to Qwest was so small it wouldn't make a difference in the case.
The prosecutors want to prove Nacchio deceived the public while getting rich selling his stock on inside information.
Nacchio claimed that Qwest's financial picture, starting in late 2000, was as good as he publicly stated. That's because he had knowledge that the company was in line for national security contracts he could not reveal.
"Well it's a decent argument to make and you sort of have to close the loop. And the question is if it was as rosy as he believed, let alone the public believing it, why was he selling his stock?" said CBS4's legal analyst Andrew Cohen.
Nacchio's lawyers suggested it was because the Qwest board ordered him to do it.
Last week in court, Nacchio's lawyers told the judge they still needed clearance from the federal government to talk with their client about classified information.
In Monday's unsealed documents, prosecutors claimed that Nacchio's national security strategy was 'wholly irrelevant'.
"This is an interesting factual defense. The question, I think for this whole trial, is whether the negative perception people have of him will blow away this defense," Cohen said.
The federal prosecutors said Qwest's revenue from classified government contracts in 2001 was only a fraction of 1 percent, which is not enough to make a big difference to the company revenue or Nacchio's defense.
Federal judge Edward Nottingham indicated he'd like Nacchio's trial to start this fall.
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