U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20088 / April 24, 2007
United States v. Joseph P. Nacchio, Case No. 1:05-CR-00545-EWN (D. Colo.)
Joseph P. Nacchio, Former Chief Executive Officer of Qwest, Found Guilty of 19 Counts of Insider Trading in Criminal Case
The Securities and Exchange Commission (Commission) announced today that on April 19, 2007, a federal jury found Joseph P. Nacchio, the former chief executive officer of Qwest Communications International Inc., guilty of insider trading in the criminal action brought by the United States Attorneys office in Denver, Colorado.
The jury found Nacchio, 57, guilty of 19 counts of insider trading, covering $52 million in stock sales, that were charged in a December 2005 indictment. The jury returned not guilty verdicts on the remaining 23 counts. Nacchio faces up to 10 years in prison and a $1 million fine per count at sentencing, which Judge Nottingham has scheduled for July 27, 2007. Nacchio was released on bond pending his sentencing. He also faces asset forfeiture, the amount of which will be determined by Judge Nottingham at a separate hearing.
In March 2005, the Commission filed a complaint in the United States District Court for the District of Colorado against Nacchio and other officers, directors, and employees of the company alleging that from at least April 1, 1999 through March 31, 2002, Nacchio and others at Qwest engaged in a massive financial fraud that hid from the investing public the true source of the company's revenue and earnings growth. The complaint alleged that to meet aggressive targets for Qwest's revenue and earnings growth, Qwest fraudulently and repeatedly relied on immediate revenue recognition from one-time sales of assets known as "IRUs" and certain equipment, while falsely claiming to the investing public that the revenue was recurring. The complaint also alleged that Nacchio and others fraudulently and materially misrepresented Qwest's performance and growth to the investing public and that Nacchio traded on the basis of material nonpublic information. The Commission's civil action has been stayed against Nacchio, pending the outcome of the criminal action. Securities and Exchange Commission v. Joseph P. Nacchio, Robert S. Woodruff, Robin R. Szeliga, Afshin Mohebbi, James J. Kozlowski and Frank T. Noyes, Civ. No. 05-MSK-480 (CBS) (D. Colo.).
For additional information on related Commission actions, see Litigation Release No. 19313 (July 26, 2005), Litigation Release No. 19136 (March 15, 2005), Litigation Release No. 19134 (March 15, 2005), Sec. Exch. Act Rel. No. 34-51373 (March 15, 2005), Litigation Release No. 19135 (March 15, 2005), Sec. Exch. Act Rel. No. 34-51375 (March 15, 2005), Sec. Exch. Act Rel. No. 34-51374 (March 15, 2005), Litigation Release No.18936 (October 21, 2004), Litigation Release No. 18800 (July 27, 2004), Litigation Release No. 18754 (June 21, 2004), Litigation Release No. 18755 (June 21, 2004), Litigation Release No.18374 (September 29, 2003), and Litigation Release No. 17996 (February 25, 2003).