Nacchio, former CEO of Denver-based Qwest Communications, is charged
with improperly selling $101 million of stock months before the
telephone service provider for 14 mostly Western states became mired
in a multibillion dollar accounting scandal.

Prosecutors claim Nacchio, a Brooklyn-born former AT&T executive, sold
his stock while knowing the company was at financial risk. Shares of
Qwest Communications International Inc. plummeted from more than $60 a
share in 2000 to just $2 a share in 2002 and its near-collapse left
thousands of pensioners in financial straits.
Nacchio has an unusual defense: The sale wasn't improper, he
maintains, because he believed Qwest stood at the time to get millions
in secret contracts from clandestine government agencies. Within
Qwest, he alone was privy to the contracts, he says.
The contracts are a key point of evidence. Both sides have agreed
financial data from the contracts will be used at trial, through the
agencies involved will remain secret.
...
Nacchio was charged in December 2005, nearly three years after then-
Attorney General John Ashcroft announced the first indictments in the
Qwest Communications International Inc. investigation, calling it an
example of the government's intolerance of white-collar crime.

Although Qwest was forced to restate about $2.2 billion in revenue
because of the scandal, Nacchio's case will focus narrowly on 42 stock
sales he made in the first five months of 2001 amid internal warnings
that the company was at financial risk. The transactions ranged from
$191,000 to $13.6 million each.
Each count faced by the 57-year-old carries a penalty of up to 10
years in prison and a $1 million fine.

Federal regulators say Qwest falsely reported sales of capacity on
fiber optic cables as recurring instead of one-time revenue between
April 1999 and March 2002. That allowed Qwest to improperly report
approximately $3 billion in revenue, which helped pave the way for its
2000 acquisition of former Baby Bell U S West Inc.
He eventually became a member of two panels that work with the federal
government and the communications industry on homeland security and
other issues. Because of those ties, Nacchio said he alone among Qwest
executives was privy to information about secret government contracts.

Anyone wanting access to the classified information must get a Justice
Department security clearance. For the trial, prosecutors and
Nacchio's attorneys worked out substitute explanations that can be
used publicly.
Prosecutors maintain that revenue Qwest received from secret
government contracts amounted to less than 1 percent of its total
revenue. They also note that Qwest's classified government revenue
declined in 2002.