Mar 21, 2007 10:51 pm US/Mountain
Nacchio Co-Worker Admits To Insider Trading
Former Qwest CEO Charged With 42 Counts Of Insider Trading
by Rick Sallinger
DENVER (CBS4) ―
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Wolfe claimed Nacchio hid Qwest's true financial picture from investors in 2000 and early 2001, then later disclosed that much of the revenue came from one-time sales. The stock price dropped.
CBS
A former Qwest executive admitted he had taken part in insider trading at the Joe Nacchio trial, and that's the allegation against Nacchio as he is tried in Denver federal court.
Wednesday, it was the former director of investor relations, Lee Wolfe, who was answering questions about what he knew when he sold his stock. Wolfe is cooperating with the government in this case against Nacchio. That, most likely, is why he has not been charged in this case, and he was on the stand as the government's first witness in the trial of Nacchio.
With his family at his side, Nacchio listened to the words of Wolfe, a longtime co-worker. Wolfe worked at AT&T with Nacchio and then Qwest. On the witness stand he admitted to insider trading himself.
"I knew it was wrong and should not do it anymore," Wolfe testified.
"The reality is, the more top-level employees who were actually trading on insider information, and admit to having done that," attorney Reid Neureiter said. "That's powerful information against Mr. Nacchio in this case."
Wolfe claimed Nacchio hid Qwest's true financial picture from investors in 2000 and early 2001, then later disclosed that much of the revenue came from one-time sales. The stock price dropped.
Wolfe quoted Nacchio as saying, "This is what happens when you disclose."
He said letters and emails from investors followed.
"Investors don't know how many cockroaches are in your bag," one comment said. "You are telling us we are fools for believing you," said another.
Then it was time for cross examination. John Richilano for the defense said, "You seem eager to get your story out." The judge responded, "Don't start arguing with the witness right off the bat."
Also Wednesday, the Nacchio defense team filed a motion to try to block testimony by financial analysts and Qwest investors who claim to have lost money when the stock price fell. The judge indicated he would allow at least some of that.
Cross examination of Wolfe will continue Thursday morning.
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