Corporate Governance

US v. Nacchio (En Banc): The Defendant Speaks

By J. Robert Brown

As we have come to expect, the Defense has written a powerful brief.  It mostly takes the position that the testimony offered by Daniel Fischel was extraordinarily relevant.  It was, after all, the "heart of Nacchio's defense."   As the brief describes: 

• The heart of Nacchio?s defense, indeed the only substantive defense witness on the key issues, was Professor Daniel Fischel, one of the nation?s leading experts on these subjects who is frequently retained by the government, including DOJ, and has testified more than 200 times and never before been excluded. Fischel would have explained, inter alia, that the sales for which Nacchio was convicted were consistent with his previously announced plan and did not accelerate in 2001 as the government alleged, that the government?s basic premise that investors discounted the value of revenues attributable to IRUs was demonstrably incorrect, that the market did not react negatively to the eventual disclosure of the information that the prosecution thought was material, and that other market forces explained the decline in Qwest?s stock price, particularly the massive economic decline in the entire telecommunications sector. Rule 702 itself describes the presentation of this exact testimony as a ?venerable practice.?
  

The argument, however, requires a certain delicacy.  It is true that Fischel was the only "substantive defense witness" (Phillip Anschutz and a Catholic Abbot were the only other witnesses called by the Defendant).  But this can cut against the Defendant.  The decision to present one witness was not compelled by the case but an affirmative strategy. 

In other words, with its entire affirmative case built around a single substantive witness, one might expect a high degree of thought and attention to the circumstances surrounding the admissibility of the testimony.  Yet the Defendant was unable to meet the requirements imposed by the trial judge for admissibility and unable to find the opportunity to request a hearing.  The inability was, apparently, related to the onset of Passover.  See Brief at n. 27  ("The response was not only prepared in less than a day, but also on the first day and second night of Passover. Nacchio?s counsel had requested a brief adjournment during Passover so that his lawyers could observe the holiday with their families in New Jersey, but the judge, after consulting with ?[m]y Jewish friends,? Supp. App. 68, adjourned only one-hour early on the first night, so ?[y]ou can go to eat gefiltefish [sic],?). 

Full post as published by The Race to the Bottom on September 09, 2008 (boomark / email).