Prosecutors are recommending that former Qwest Communications International chief Joseph Nacchio serve more than seven years in prison for insider trading during the telecommunications boom.
Nacchio, who was CEO of Qwest from 1997 to 2002, would serve 87 months plus three years' probation, and pay as much as US$19 million in fines, under the recommendation filed last Friday by federal attorneys. He was convicted in federal court in April of 19 counts of insider trading involving $52 million in stock sales. He was cleared on 23 other insider-trading counts.
Following the prosecutors' sentence recommendation to Judge Edward Nottingham of the US District Court for the District of Colorado, in Denver, Nacchio's lawyers on Friday asked for a reduction in the recommended sentence. They cited good works by Nacchio and the possible effect of a long sentence for Nacchio on the health of two of his family members.
In their filing, the government's attorneys said Nacchio deserved a sentence at the high end of the scale because of brazen lies to investors, the size of his ill-gotten gains, and other factors. He faces a maximum possible sentence of 10 years in prison and a $1 million fine for each count, plus a forfeiture of assets.
Qwest is a regional incumbent telecommunications provider that serves several states in the West and Midwest. Nacchio resigned in 2002 amid concerns from shareholders about his $27 million annual compensation package. In 2005, the US Securities and Exchange Commission charged him and other Qwest executives with fraud, saying they misrepresented one-time sales of network capacity as recurring revenue in order to boost the company's stock price. Nacchio unloaded his own stock while predicting strong growth, all the while knowing about problems with Qwest's performance, the government charged.