As expected, former Qwest Communications International Inc. CEO Joseph Nacchio has been indicted by a federal grand jury on charges of insider trading.
Nacchio, who was CEO from 1997 until June 2002, was indicted Tuesday on 42 counts of insider trading, the latest development in a lengthy federal investigation into the Denver-based regional Bell operating company’s accounting practices -- an investigation that also has targeted other former Qwest executives.
The indictment charged that in a string of 42 transactions between January and May 2001, Nacchio sold off $101 million in the telco’s stock with the knowledge that the company would not meet upcoming revenue-performance targets and reportedly netted $42 million in cumulative profit from the transactions.
Following the last of Nacchio’s stock sales in May 2001, the company’s stock took a nosedive, dropping from a high of $41 per share to less than $2 by July 2002.
Nacchio faces a maximum penalty of 10 years and a $1 million fine for each of the 42 counts. Federal prosecutors are also demanding that he make $100 million in restitution.
He arrived in Denver Monday from New Jersey, and he was expected to make his first court appearance Tuesday. Reports are that he intends to plead not guilty to the charges.
Nacchio is just the latest former Qwest executive to face charges stemming from the extended federal probe into the telco’s accounting practices.
In July, former chief financial officer Robin Szeliga struck a plea bargain with federal investigators, pleading guilty to a single charge of insider trading and agreeing to cooperate with the investigation. Szeliga stated in the plea agreement that Qwest executives were aware that revenue figures were being inflated.
Nacchio and other executives also face civil charges in an ongoing Securities and Exchange Commission investigation into charges that Qwest inflated its revenue estimates in 2000.