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Ex-Qwest CEO Nacchio Loses Latest Legal Appeal

Nacchio now faces six years in prison and must pay back a still-to-be-determined amount of money that he was accused of obtaining through illegal insider trading.
Former Qwest Communications chief executive Joe Nacchio is likely headed to a federal prison in Pennsylvania after an appeals court affirmed his conviction on illegal insider-trading charges.

Nacchio's lawyers can make a last-ditch appeal to the U.S. Supreme Court, but chances the high court will hear the case are considered slim.

Nacchio came close to avoiding a conviction as the 10th Federal Circuit ruled against him 5-4 last week. Nacchio now faces six years in prison and must pay back a still-to-be-determined amount of money that he was accused of obtaining through illegal insider trading.

The drawn-out legal proceedings began with a jury trial in March 2007. The federal jury found him guilty on 19 of 42 counts. He was charged with selling more than $100 million in Qwest stock from January to May 2001 as the telecommunications bubble began deflating. Nacchio is the last of the indicted top executives who were charged with profiting illegally from insider trading. Hundreds of Qwest retirees and investors lost millions when Qwest stock tanked.

At the heart of Nacchio's latest appeal were the actions of U.S. District Judge Edward Nottingham, the trial judge who blocked the appearance of a pro-Nacchio securities expert during the trial. In the last appeal, the four dissenting judges favored Nacchio by stating: "We have nagging doubts about the district judge's sense of fairness toward this defendant. If the decision here was not an abuse of discretion, we wonder what one would look like."

In unrelated actions, Nottingham later resigned amid complaints that he paid large sums of money to strippers and watched adult videos in his chambers, according to widespread news reports.

The majority judges, however, said that Nottingham had "properly performed" his role in deciding to exclude the securities expert from testifying. "The district court's exclusion of the testimony was not arbitrary, capricious, whimsical, or manifestly unreasonable," the majority judges said.

Prosecutors hailed the final decision. David Gaouette, acting U.S. attorney for Colorado, said the ruling "reaffirms what the government has believed from the beginning: that the jury verdict finding Mr. Nacchio guilty was indeed correct."

"This is a big win for the government but even bigger for the retirees of Qwest," said Cliff Stricklin, who directed the prosecution during the trial, according to media reports.

Maureen Mahoney, Nacchio's attorney, said the Supreme Court could review the appeal, but Stricklin had his doubts, noting that the high court gets thousands of appeals every year and takes just a few. "I don't see this being the type of case they want to hear," he said. "In other words, this is the end of the Nacchio affair."