Brooklyn’s own telecom tycoon Joe Nacchio was indicted yesterday for cheating with insider information to sell $100.8 million of his Qwest stock – while his investors lost a staggering $106 billion.
The 56-year-old ex-telephone worker, who rose to the top running Qwest, was eventually ousted from the company as its stock collapsed in 2002 amid accounting irregularities and management bungles.
Nacchio had enriched himself during his five years building the company into a powerhouse by cashing out as much as $300 million in shares and options – including a big block of $100.8 million in Qwest stock even as he knew, ahead of the public, that his company was headed for a fall, prosecutors charged.
Federal investigators in Denver, home of the still weakened Qwest, spent nearly four years building a criminal case against Nacchio.
Investigators lined up Nacchio’s key managers – which include former CFO Robin Szeliga, sales chief Greg Casey, and the former president, Afshin Mohebbi – to testify against him.
Nacchio faces a minimum of 10 years in jail, plus fines exceeding $40 million, and he must return the $100.8 million in ill-gotten gains.
Separately, Nacchio was hit eight months ago with a civil case by the Securities and Exchange Commission, accusing him of orchestrating a $3 billion bookkeeping fraud to rig profits at Qwest by swapping unsold long distance capacity with other telecoms, including Global Crossing.
He lived in Brooklyn and Staten Island during his career at AT&T and came to the attention of billionaire Philip Anschutz who, in 1997, placed him in charge of his startup, Qwest.
In 2000, at Qwest’s peak in the telecom boom, its share price was $64.60. But it tumbled in just two years to $1.11 a share following allegations of mismanagement and rigged profits, hastened by the industry’s overbuilding of long distance lines.