Nacchio Live Blogging: Day 3, Part III
[Note: This is not a transcript. It is my notes of the testimony and proceedings, typed as fast I can. Spelling errors will be fixed later. I will update every 15 minutes or so -- you can either bookmark and check back or refresh your screen periodically.] 2:30 pm Cross examination of Lee Wolfe by Defense Attorney John Richilano. You were requested to leave Qwest? No I wasn't. Ms. Szeliga didn't tell you to find other work? No. You benefited financially from the success of the company? Yes. You sold stock in 2000, not just 2001. True. You sold 25,000 shares in 2000? Yes.
You testified on direct that your net was $646,000k on the 2001 sales. The gross was more? Yes. The gross number is the market price. The net is where you back out the option price of $7.78? Yes. In 2000, you made about $1 million net from the stock sales, right? Yes. Did you talk to anyone before you exercised those options? Did you talk to a lawyer? Not before I sold the options. Not about that. Re: Days of preparation with Government for trial. Wolfe says there were about 8 for preparation More in 2006 and 2005. "I don't recall the number. " He estimates 40 to 45 hours. Most recent meeting was this past weekend. Saturday and Sunday. He lives in New Jersey. He came out here and made himself available to prosecutors. Aug. 12, 2004 was his first FBI interview. There was another the following day. Another on Sept. 15, two in October. He doesn't remember how many. He came out here to make himself available for FBI interviews. His lawyer is named Johnson. He is from Boulder. Johnson relayed to him Richilano's request to interview him. He refused to be interviewed by Richilano. He cooperated with the SEC. He attended five days of hearing. They were not adversarial proceedings. Q: You didn't tell the SEC that you'd give back your stock proceeds did you? Not yet. Well they haven't asked you for them or started an action against you, right? Right. That was a benefit you hoped to get? I was more concerned about prosecution. He's not cooperating because he's a good citizen is he? That's in the mix but not the only reason. His lawyer helped him get immunity? Yes. What was his understanding of what would happen if he was prosecuted? His understanding was that if he got prosecuted he could go to jail a long time. He didn't want this to happen. This is what motivated him to start cooperating. "I knew that what I did was wrong so I was concerned about prosecution. But I had a crisis of conscience too." 2:50 pm Richilano moves to Wolfe's relationship with Nacchio. Their's was largely a professional relationship. He knew his management style. It was no-nonsense, entrepreneurial, optimistic. Nacchio. worked hard to get the most out of his managers and get them to exceed expectations. When Anschutz hired Nacchio he knew it would be a different experience than he had had at AT&T. Why did Wolfe want to go along with Nacchio to Qwest? The challenge of a startup company, new challenges. "It's true I was interested in following Mr. Nacchio." He had told Mr. N. to keep him in mind. You joined right after Qwest went public, June 30, 1997? Yes. My fingers are hurting, I have to take a break, back soon. Back, 2:58 pm. What I didn't type: A long series of questions about how big Qwest became in the fiberoptic market. The prosecution doesn't object but the Judge does. There is a fight with the Judge over the extent of cross. Judge tells Richiliano to stick to matters raised in direct examination. Richilano moves to Nacchio's travel schedule. On Dec. 20, 2000, Wolfe tracked down Nacchio. Where was Nacchio on Dec. 20? I don't know. The call was Dec. 21. Where was Nacchio? I don't remember. Did you have trouble contacting him? I don't remember. Your role at Qwest was the same as AT&T? Yes. I was the liason with the investment community. I was to be Qwest's eyes and ears in the community. Part of that job was serving the analyst. Who was your first duty to at Qwest? Mr. Nacchio. I also had a duty to make sure investors got the type of information they needed to do their jobs. There were many things you couldn't tell them? True. Just because an investor wanted information, didn't mean he was allowed to give it. Right. Your real obligation was to the shareholders. True. What Qwest put out to the investment community included the image it was very aggressive. Mr. Nacchio was the embodiment of that? True. That's why you followed him out here? True. So the investors knew that when Nacchio made a statement about public targets, those targets would be aggressive? Yes. Stretch is a fact of life in corporate America? Yes. Investors knew more than Qwest gave them (meaning they got information from other sources)? Yes. Qwest is closely followed in the investment community as is their major competitors? True. You had to make sure what you gave investors was your's to give and their's to receive? You can't tell them everything they want to know.? True, but there's a certain amount they may need to know. But you can't tell them everything because it might hurt the shareowners? I'm not sure what you mean because analysts may be shareholders too. 3:10 pm. Back soon. My battery is up to 63% so I'm going to go back to the main courtroom where I can see the jury. 3:20: Back in main courtroom. Richilano: Wolfe's responsibilities were different than Nacchio's. Yes. His role in investor relations did not include the budget process? Right. In investor relations, he had nothing to do with that process. Right. He was aware that investors had no business knowing about the internal budget? Yes. Recess until 3:45. Going to a new and final thread for the day.
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