Federal prosecutors have charged Joseph Nacchio, the former chief executive officer of Qwest Communications International Inc., with 42 counts of insider trading, according to published reports.
Nacchio has been accused of making $100.8 million by trading in Qwest shares between January 2 and May 29, 2001.
The indictment accused Nacchio of “a manipulative and deceptive” scheme to commit fraud, according to the Associated Press. It also asserted he was “specifically and repeatedly warned” about the financial risks facing his company just five months before the stock trades, that was well aware of Qwest’s “extremely aggressive” financial targets, and that he knew there wouldn’t be enough revenue from other sources to “close the gap” between Qwest’s publicly stated goals and its actual performance, according to the AP.
Each charge carries a maximum penalty of 10 years in prison and a fine of up to $1 million, according to Bloomberg. Prosecutors also want Nacchio to forfeit the $100.8 million, the wire service added.
“After many months of intense media attention and speculation, Joe Nacchio looks forward to vindicating his name in court,” Nacchio’s attorneys said, according to the AP.
Nacchio was credited with turning Qwest into a Wall Street darling during the Internet craze, but the board of directors booted him out in 2002 after the government launched an investigation into the company’s accounting practices. Last year, Qwest agreed to pay $250 million to settle SEC fraud charges.
In March, the Securities and Exchange Commission charged Nacchio and eight other former Qwest officers and employees with fraud and other violations of the federal securities laws. In three separate but related civil actions, the commission alleged that, between 1999 and 2002, the individuals engaged “in a multifaceted fraudulent scheme designed to mislead the investing public about the company’s revenue and growth.”