Former Qwest CEO Joe Nacchio faces 42 counts of insider trading.
Jurors heard testimony this week from Qwest’s founder and former president in the insider trading trial of ex-CEO Joe Nacchio.
For the prosecution, Qwest’s ex-president Afshin Mohebbi testified that he repeatedly warned Nacchio about the carrier’s ability to meet 2001 financial targets, according to published reports. Qwest’s internal revenue targets were $21.8 billion while publicly stated goals were $21.3 billion.
Under cross-examination, Mohebbi said Qwest’s revenue for that year was within the publicly stated goal. Mohebbi was granted immunity from prosecution for his testimony.
Also this week, Qwest founder Philip Anschutz said Nacchio tried to resign after his college-age son attempted suicide. Anschutz testified for the defense.
Anschutz said Nacchio “broke down in tears” and tried to quit in early 2001 after his son tried to take his own life, the reports said. This would be during the time that prosecutors allege Nacchio was illegally dumping Qwest stock.
Anschutz’s testimony was intended to show that Nacchio was preoccupied with his son and not with dumping Qwest stock during that time, the reports state.
Nacchio is accused of selling $101 million of Qwest stock between January and May of 2001 even as he was talking up the company’s fortunes to investment analysts. Nacchio reportedly believed Qwest would win lucrative contracts from secretive government agencies for national security.
Qwest’s stock nosedived from $55 per share in early 2001 to $2 per share during the telecom bubble, after analysts realized Qwest would not meet its ambitious targets and after accounting irregularities surfaced at the carrier.
Among the allegations against Nacchio is that the company incorrectly booked one time revenue on fiber capacity sales as recurring revenue between 1999 and 2002. Qwest subsequently had to restate $2.2 billion in revenue.
Nacchio left Qwest in 2002 after a six-year tenure. He faces 42 counts of insider trading with each count carrying a potential 10-year prison term.
