Joe Nacchio Trial: Day 4
I'm not at the trial today. For those of you who don't know me, I'm a full-time criminal defense attorney who blogs daily at TalkLeft: The Politics of Crime on national issues and here at 5280.com on local issues. Depending on your interest, I will cover a lot of the trial. Before it began, I wrote a few times that I would be providing live coverage of the jury selection, opening arguments and days I think to be especially critical, such as the days when the cooperating witnesses like Lee Wolfe, Robin Szeliga, and Mr. Mohebbi testify. Since I'm not being paid to attend the entire trial, there's only so much I can cover. If someone were to provide me with the daily transcripts, I would do a recap every night with highlights and most relevant quotes from the testimony, much like my live-blogging, but they are too expensive for me to foot the bill. If one of you readers want to make financial arrangements with the court reporter to email me the day's transcript each evening, I'll be glad to do that. Just let me know. So, for today, let's do a recap from others' coverage: The day began with Lee Wolfe still undergoing cross-examination by defense attorney John Richilano. According to Rocky reporter Jeff Smith's blog, Wolfe got confused about recurring vs. non-recurring revenue. Notwithstanding my two days at the trial hearing the concept described over and over by the lawyers, I was a bit confused too. So, I have uploaded the Government's explanation from its opening argument here. It's four pages, begin at line 14 on the first page. It's not all that complicated when you read it. A not-so good defense moment came with this exchange.
Wolfe talked about what Nacchio would say when Wolfe was pushing for more disclosure to investors: "Screw 'em. Go tell them to buy."
Then, former Qwest director Craig Slater took the stand. He works for Phil Anschutz as an Executive Vice President. Jeff Smith (same link, I guess the Rocky hasn't learned how to do permalinks yet where each entry has its own url) reports Judge Nottingham exploded at lead defense attorney Herbert Stern during his cross examination of Slater.
The eruption comes soon after Nottingham has rebuked Stern for summarizing witness testimony, telling Stern that "if you've established something, move on, you can do that in your closing argument." Stern asks Slater if he will be available in two weeks. Nottingham erupts: "Don't stand in front of the jury and try that stuff Mr. Stern. I don't care to hear anymore of this." Stern appears rattled, and doesn't immediately continue his cross-examination. Then, after wondering if he can, Nottingham yells: "I've invited you to continue and you've just stood there."
Judge Nottingham also denied Stern's request for a break, told him to have his material organized before he got to the courtroom and criticized the defense for not being quick enough with its exhibits. But, Stern still made some points critical to the defense. In opening, Stern said he would show that Anschutz pursued Nacchio for the CEO job at Qwest, not the other way around, that because of Nacchio's ill son, Anschutz agreed to put in his employment contract that Nacchio wouldn't have to move to Denver, could keep his New Jersey office and wouldn't have to spend more than four days a week here. Stern also told the jury the Qwest Board of Directors refused to extend the deadline for his exercise of the stock options, leaving him no choice but to sell or forfeit them. He also said Nacchio could have left Qwest and sold all his options in 2001 because his contract was up but Qwest wanted him to stay and offered him a new contract, which Nacchio accepted, even though his son had recently attempted suicide (another "secre"t Stern shared with the jury.) Craig Slater, called by the Government, confirmed almost all of Stern's statements. Jeff Smith reports:
Lead defense attorney Herbert Stern is now cross-examining Slater, making the point that Qwest founder Anschutz pursued Nacchio to run the Denver company in 1997. Slater agreed with Stern that at the time, Nacchio was a top AT&T executive and had an outstanding reputation in the industry. ....Slater agreed this afternoon that Nacchio asked the board if he could extend the June 2003 expiration date of his stock options.Slater said the company wanted to extend the options, but estimated it would have had to take an accounting charge of several hundred millions of dollars against its earnings. ....Slater also confirmed that Nacchio was considering resigning in early 2001 at a time that one of his son's was going through emotional issues, and that Nacchio could have sold all of his vested options then.
I wouldn't make too much of Judge Notthingham's railing at the defense just yet. There will be days he rails at the prosecutors. Unless it becomes overwhelmingly one-sided, it's likely to all balance out in the wash. Update: Other good coverage of today's proceedings: Bloomberg News. See also, the Associated Press on testimony that Nacchio got a raise after the company revealed using one-time transactions in meeting financial targets.
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