Ex-Qwest CEO Nacchio convicted

DENVER — Joe Nacchio, a former AT&T executive tapped to transform Qwest Communications into a major telecommunications competitor, was convicted Thursday of 19 of 42 insider trading charges after one-time top executives described his relentless drive to meet revenue projections without revealing financial risks.

A U.S. District Court jury deliberated six days before concluding on 19 counts that the former Qwest chief executive illegally sold stock when he knew the company faced financial challenges and relied heavily on one-time sales to meet revenue targets.

Judge Joe Nottingham set a July 27 sentencing date for Nacchio, who is free on $2 million bail. Each count carries a potential penalty of 10 years in prison and a $1 million fine.

“‘Convicted felon Joe Nacchio’ has a very nice ring to it,” boasted Troy Eid, the U.S. attorney for Colorado.

“We certainly will appeal,” defense attorney Herbert Stern said.

Nacchio, who still faces a civil fraud lawsuit, declined to comment.

Nacchio, 57, was accused of selling $101 million worth of stock in the first five months of 2001 based on inside information that Qwest faced financial risks. With the decision, the eight men and four women on the jury turned away Nacchio’s claim that he believed in the company’s future despite concerns voiced by business managers.

The criminal case stemmed from a years-long government investigation into an accounting scandal at Qwest Communications International Inc., a Denver-based primary telephone service provider in 14 mostly Western states.

Federal regulators have said Qwest falsely reported fiber-optic capacity sales as recurring instead of one-time revenue between April 1999 and March 2002. The practice allowed Qwest to improperly report about $3 billion in revenue, which helped pave the way for its acquisition of former Baby Bell U S West Inc., regulators have alleged. Qwest later restated about $2.2 billion.