Ex-Qwest CEO Nacchio sentenced for insider sales
Joseph Nacchio, the former chief executive of Qwest Communications International Inc. who was forced to resign in a multibillion-dollar accounting scandal, was sentenced Friday to six years in prison for illegally selling $52 million in stock while not telling investors that his telecommunications company faced serious financial risks.
Nacchio received a maximum $19-million fine and two years’ probation after serving his sentence. “The crimes the defendant has been found guilty of are crimes of overarching greed,” U.S. District Judge Edward Nottingham declared as Nacchio stood before him.
Nacchio, 58, a former AT&T; executive, is the latest corporate leader to be convicted in a fraud scandal after malfeasance at companies such as Enron Corp. and WorldCom Inc.
The case grew out of an accounting scandal in which federal regulators said Qwest falsely reported phone network capacity sales as recurring instead of one-time revenue between April 1999 and March 2002. They said the practices allowed Qwest to improperly report $3 billion in revenue and helped it acquire former Baby Bell US West Inc.
Prosecutors adopted a narrow focus on insider trading against Nacchio, indicting him for 42 stock sales completed in the first five months of 2001 -- a time when unit managers were warning that Qwest faced financial risks because it was increasingly relying on one-time sales to meet revenue targets.
Thousands of investors lost money when Qwest stock plummeted from more than $60 a share in 2000 to just $2 a share in 2002. The scandal forced Qwest, a primary telephone service provider in 14 mostly Western states, to restate $2.2 billion in revenue.
Nacchio, who declined a chance to testify during Friday’s hearing, approached the bench at the end, saying he wanted to speak. Nottingham told him he’d had his chance.
The judge then recessed the trial, leaving Nacchio standing there.