How Joe Nacchio May Get Off Easier

August 2009

On Friday, as the victims of Qwest chief executive Joe Nacchio's insider-trading exploits planned perhaps meager weekends, the Tenth Circuit Court of Appeals in Denver issued a ruling that could lower his prison sentence and the amount of fines he must pay in the wake of his 2007 conviction (via The Wall Street Journal). The rulings do not clarify how long Nacchio, who in April finally began a six-year sentence at Schuylkill minimum security prison in Pennsylvania, should spend in prison or how much he should have paid, but because of a miscalculation in the amount Nacchio got away with, it appears he was punished too harshly. Reuters also notes that the sentence could be reduced, quoting the ruling: "Mr. Nacchio's increased prison sentence should be linked to the gain actually resulting from the offense, not to gain attributable to legitimate price appreciation and the underlying inherent value of the Qwest shares." And that has prompted a review of the case by the U.S. Department of Justice. Nacchio's penalties could also be reduced as a result of the ruling, reports the Denver Business Journal. "Mr. Nacchio's gain should be calculated in a manner that is more narrowly focused on producing a figure that reflects, in at least approximate terms, the proceeds related to his criminally culpable conduct," according to the legal opinion by Circuit Judge Jerome Holmes.

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