Court reinstates Nacchio verdict

A federal appeals court reinstated the insider trading conviction of former Qwest Chief Executive Joe Nacchio in a split decision Wednesday and lifted the stay that had spared him from starting a six-year prison term.

Nacchio’s attorney strongly suggested she would appeal.

“We are optimistic that the Supreme Court of the United States will review the case,” Maureen Mahoney said in a written statement. She stopped short of saying an appeal would be filed and didn’t immediately return calls.

There was no immediate word on when and where Nacchio would have to surrender.

A three-judge panel of the 10th U.S. Circuit Court of Appeals overturned the conviction last year, ruling that the trial judge improperly barred testimony from a defense witness.

But in a 5-4 ruling, the full 10th Circuit said Wednesday that the trial court was “well within its discretion” to keep the witness off the stand.

The four dissenting judges disagreed strongly. “We have nagging doubts about the district judge’s sense of fairness toward this defendant. If the decision here was not an abuse of discretion, we wonder what one would look like,” they wrote.

A jury convicted Nacchio in 2007 of 19 counts of insider trading while acquitting him on 23 counts of the same charge.

Federal prosecutors alleged Nacchio sold $52 million worth of stock when he knew Denver-based Qwest Communications International Inc. was at risk while other investors did not.

He was sentenced to six years in prison but has remained free during his appeal.

At trial, Nacchio’s lawyers wanted author and Northwestern University professor Daniel Fischel to explain why the telecom company’s stock fell and discuss whether Nacchio’s trading pattern was suspicious.

U.S. District Judge Edward Nottingham barred Fischel’s testimony over concerns about his methodology. Nacchio’s lawyers argued that Nottingham didn’t give them a chance to establish his reliability. Nottingham has since resigned amid unrelated complaints.