Joseph Nacchio has been found guilty of engaging in illegal insider trading. In what is probably the last high-profile corporate case since the Enron scandal, the former Qwest Communications International chief executive was convicted on 19 counts of insider trading for selling $52 million worth of Qwest shares in April and May 2001 after receiving private warnings that the company would miss revenue targets, according to Bloomberg.
He was found not guilty on 23 counts related to earlier trades totaling $49 million, the wire service notes. Nacchio faces 10 years in prison and a $1 million fine on each count when he is sentenced July 27. He is currently free on bail, Bloomberg notes.
“The term ‘convicted felon Joe Nacchio’ has a very nice ring to it,” said Colorado U.S. Attorney Troy Eid outside the courthouse following the verdict, reports Bloomberg. “Make no mistake, my friends, this is an overwhelming determination of guilt.”
Nacchio was smiling while the not-guilty verdicts were read, but quickly turned stoic when the guilty counts came in, according to The Wall Street Journal. The government’s courtroom strategy was to prove that Nacchio used questionable accounting practices to boost Qwest’s stock price, explains the Journal.
For example, Nacchio counted one-time revenue swaps of fiber-optic capacity with other companies as long-term revenue. In addition, the government’s witnesses testified that he set unreasonable targets and insisted that his employees meet those targets, according to the paper. One witness said Nacchio shrugged off warnings from top Qwest executives in late 2000, who said the company would miss its public revenue target of up to $21.7 billion in 2001, adds Bloomberg.
The defense called only three witnesses: one was used to show that Nacchio’s stock sales were consistent with prior sales; the other two were Qwest founder Phil Anschutz and a Catholic abbot, who testified about learning of Nacchio’s son’s suicide attempt in January 2001, notes the Journal.
Nacchio did not testify in his own defense.