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Qwest questions and answers(Denver Post, The (KRT)) Dec. 21--QUESTION: What is this case about? ANSWER: Tuesday's indictment of former Qwest chief executive Joe Nacchio on 42 counts of insider trading follows a three- year criminal investigation into accounting irregularities that resulted in Qwest -- the 14-state, Denver-based phone company -- wiping out $2.5 billion in improperly logged revenue for 2000-02. Thousands of employees lost their jobs under Nacchio, the company's stock traded as low as $1.11 in mid-2002, and some retirees' 401(k)s were decimated. Q: Why has it taken so long to bring criminal charges? A: Given the complexity and size of the case, three or four years is not a long time, said one former federal prosecutor. Q: What are the specifics of the insider-trading charges? A: According to the indictment, from January through May 2001, Nacchio sold $100.8 million worth of Qwest stock while he knew -- but the public did not -- that the company's financial performance and targets were in question. Q: What is his defense? A: "Now that he will have his day in court, he will plead not guilty with perfect confidence in his exoneration," Nacchio's attorneys said in a statement. In a trial, their strategy may be to say that Nacchio's stock sales were scheduled to diversify his portfolio and that he believed his public statements about Qwest's financial condition were true at the time he made them. Q: When would a trial start? A: Defendants have a right to go to trial 30 to 90 days after they are indicted. But defendants frequently waive their right to a quick court date in order to prepare thoroughly. In that case, it can take a year or years before a judge hears a case. Q: What is Qwest's status? A: Qwest settled a Securities and Exchange lawsuit for $250 million in 2004 and settled the largest of its shareholder lawsuits for $400 million in November. Under chairman and CEO Richard Notebaert since mid-2002, Qwest has refocused on operational performance. Its stock recently hit a two-year high of nearly $6. Q: Have other Qwest executives have been charged? A: Yes. Former chief financial officer Robin Szeliga pleaded guilty to one count of insider trading in July and agreed to cooperate with prosecutors in the Nacchio case. Former executive vice president Marc Weisberg was indicted in February on 11 federal charges of wire fraud and money laundering and is scheduled to stand trial in January. Indictments in 2003 against four former lower-level executives ended with two of them, John Walker and Bryan Treadway, being acquitted and two others, Grant Graham and Tom Hall, pleading guilty to reduced charges. Q: Was Qwest's board of directors involved? A: Some observers have criticized the board's governance of Qwest during the Nacchio era. However, neither the board as a whole nor individual members have been implicated in the criminal or civil probes. A U.S. House committee that looked into Qwest's financial collapse in 2002 found no indication that then-board chairman Philip Anschutz was in the loop with Nacchio on deals that the Securities and Exchange Commission later claimed were fraudulent. Q: What's the likelihood that Nacchio will be convicted of insider trading? A: Experts say the prosecution's case appears to be narrow and focused. But in criminal cases, prosecutors must convince the jury beyond a reasonable doubt that the defendant committed a crime. In the civil case of fraud and insider trading filed in March against Nacchio, the Securities and Exchange Commission would have to convince a jury only that the defendant was more likely than not to have committed a crime. Q: If convicted, what could Nacchio lose? A: Criminal convictions can result in prison time, fines and restitution; civil convictions can result in fines and restitution and a bar against serving as an officer or director of a public company. As a convicted felon, he would not be allowed to own firearms. His right to vote could be taken away, at least temporarily. Q: What has Nacchio been doing since he was forced out of Qwest in June 2002? A: Nacchio left Qwest with a two-year, $3 million consulting contract that has since expired. He returned to his home in Mendham, N.J., and has kept a low profile. |