Nacchio to Use National Security Defense

December 21 2005, 9:13 AM

The 42-count indictment returned yesterday against former Qwest CEO Joseph Nacchio is not complex. He is charged with selling Qwest stock on 42 occasions in 2001 while he was in possession of information about the company to which the public was not privy.

It's a lot of quiet selling in the back alley when the public didn't know what he knew," said Gregory Goldberg, a white-collar defense attorney at Denver law firm Holland & Hart.

Nacchio's lead lawyer, Herb Stern, outlined his defense yesterday:

In Nottingham's courtroom Tuesday, Stern indicated Nacchio, 56, will use a national-security defense strategy, arguing Nacchio was privy to classified information that made him optimistic about Qwest's business prospects. It's been reported previously that Nacchio had hoped to avoid any indictment by arguing that federal national security contract information he learned outside of his Qwest position led him to believe Qwest was first in line for new federal contacts. Stern said a "number" of deals between Qwest and the federal government are at the "core of the indictment." Nacchio had been cleared for classified information while serving on a President Bush-appointed telecommunications panel.

Nacchio may also move for a change of venue. That will be a tough battle. The issue isn't whether everyone has heard the name "Joe Nacchio," but whether prospective jurors already have formed an opinion as to his guilt. The most interesting part of the case may be the testimony of the cooperating witnesses:

If the case goes to trial, prosecutors are expected to call several of Nacchio's former colleagues to testify. Robin Szeliga, Qwest's former chief financial officer who pleaded guilty to insider trading, and Gregory Casey, a former Qwest sales executive who settled civil charges brought by securities regulators, have agreed to cooperate. A potential star witness for the government is former Qwest President Afshin Mohebbi, who has been granted immunity. Prosecutors also have won the cooperation of two former midlevel managers as part of their plea bargains in related criminal cases.

Given the length to which Nacchio's lawyers went in trying to resolve the case prior to Indictment, prosecutors may be aware of the details of Nacchio's defense strategy. But, don't count Nacchio out yet. When a case depends on what a defendant knew and when he learned it, and the evidence comes from conversations relayed and memos interpreted by those singing for their supper, anything can happen.

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