Legal Commentary

10th Circuit Reinstates Nacchio Conviction, Jail Sentence

By Jeralyn

In a split decision, the 10th Circuit, en banc, has reinstated the insider trading conviction and 6 year prison sentence of former Qwest CEO Joe Nacchio. It also revoked his bail. The 104 page opinion is here (pdf.)

The 5-4 decision by the full 10th U.S. Circuit Court of Appeals reinstates Nacchio's conviction and his six-year prison sentence and revokes his release on $2 million bond.

....Nacchio was convicted in 2007 on 19 counts of insider trading for illegally selling $52 million worth of stock six years earlier, after company insiders warned him that Qwest could not meet its financial targets.

The issue was the trial court's exlcusion of Nacchio's expert witness. [More...]

Fischel was prepared to present a study of Nacchio's trading patterns that showed they were inconsistent with insider trading.

But the majority noted on Wednesday that Nacchio's attorneys first disclosed plans to call Fischel three days before the start of trial, giving the government inadequate time to review Fischel's qualifications and opinions.

"The district court's exclusion of the testimony was not arbitrary, capricious, whimsical, or manifestly unreasonable; nor are we convinced that the district court made a clear error of judgment," the majority justices wrote.

The dissenting judges said:

[D]efense attorneys should not have been penalized for "an understandable and inconsequential mistake." "Not every violation of procedural rules warrants the nuclear option of disallowing the defense to present its case," the dissenters wrote.

The case now goes back to the three judge panel to address Nacchio's arguments about the length of his sentence and amount of restitution.

I would have ruled for Nacchio, for the reasons expressed here. All of my Nacchio coverage is available here. My live-blogging of the trial on the days I attended is available at 5280.com.

Full post as published by TalkLeft on February 25, 2009 (boomark / email).