Former Qwest CEO Charged with Insider Trading
RENEE MONTAGNE, host:
Our business report begins with charges of insider trading. A federal grand jury has indicted the former CEO of Qwest, Joseph Nacchio, on charges of insider trading. NPR's Scott Horsley has this report.
SCOTT HORSLEY reporting:
The federal indictment, made public yesterday, contains 42 counts, one for each time Joseph Nacchio sold stock in Qwest during the winter and spring of 2001. Prosecutors say Nacchio knew at the time what the public did not, that Qwest was using one-time gimmicks to artificially prop up its finances. Jeff Dorschner is a spokesman for the US attorney's office in Denver.
Mr. JEFF DORSCHNER (US Attorney's Office): The indictment alleges that the defendant was specifically warned about the financial status of the company, specifically that the company's financial targets were overly aggressive and that the company's business units were underperforming.
HORSLEY: Qwest was ultimately forced to restate its earnings, erasing more than $2 billion in bogus profits. It was a hard landing for the high-flying fiber-optic company, which the stock market once valued at more than $100 billion. Today, Qwest is worth about one-tenth that much, and most of the revenue comes from the staid local telephone company Nacchio used to disdain.
If convicted, Nacchio could face 10 years in prison for each count of insider trading. Prosecutors also want him to forfeit more than $100 million he made from those 2001 stock sales. Several former Qwest executives are reportedly cooperating with the government in the case against Nacchio. The former CEO insists he's done nothing wrong. His lawyers say they're confident Nacchio will be exonerated. Scott Horsley, NPR News.