UPDATE: Nacchio denied bail
UPDATE at 1 p.m. Tuesday: Justice Breyer has denied Joseph Nacchio’s request for bail, without issuing an opinion.
Joseph P. Nacchio, a former telecom chief executive convicted of insider trading in his company’s stock and facing a six-year prison term, asked the Supreme Court on Monday to allow him to remain free temporarily on bail. Otherwise, his application (08A888) said, he will have to report to prison at noon Tuesday. The ex-CEO of Qwest Communications filed his plea with Justice Stephen G. Breyer, Circuit Justice for the Tenth Circuit; Breyer may act alone or share the plea with his colleagues.
Denied bail by a divided Tenth Circuit Court, after that Court sitting en banc split 5-4 in reinstating his conviction, Nacchio is challenging the guilty verdict in a pending case awaiting the Justices’ action (Nacchio v. U.S., docket 08-1172). The Justice Department’s response to that petition is due a week from Wednesday, and the case may go to Conference May 21.
His application sought his continued freedom in a brief interim order until his bail request can be considered, and then continued bail until the Supreme Court has taken final action on his appeal.
Two judges on a Tenth Circuit panel, over the dissent of a third panel member, had refused earlier Monday afternoon to continue Nacchio’s bail. The majority said that his lawyers had not shown “that there is a reasonable chance that the Supreme Court” will hear his challenge. Within minutes after receiving that denial, Nacchio’s lawyers filed their plea for bail with the Supreme Court.
His challenge to his conviction argues that the case marks “the first time an executive has ever been charged with insider trading when the allegedly material ‘inside’ information consisted of internal corporate risk assessments about financial results for future quarters.”
This was based, according to the petition, on the fact that a Qwest manager allegedly had warned Nacchio of some risk that the company might fall short of its year-end 2001 projections by up to 4.2 percent, “eleven or twelve months later, in a highly uncertain economic climate.”
That part of the Circuit Court decision, his lawyers have said in court papers, raised a question that the Supreme Court had left open in 1988 (Basic Inc. v. Levinson) on the proper standard of materiality for “forward-looking information” such as earnings projections.
This and other facets of the Circuit Court ruling upholding his conviction conflict with rulings in other Circuit Courts, his petition contends. The appeal also asserts that the trial judge improperly excluded a defense witness, Chicago law professor Daniel Fischel, whose testimony would have presented “the heart of Nacchio’s defense.”
The Nacchio petition also mounts a sweeping attack on the trial judge, District Judge Edward W. Nottingham, Jr. The document asserts that the judge “openly displayed ethnic bias” against Nacchio, whose parents were Italian immigrants, and against defense lawyers. The petition also adds that the judge “recently resigned in disgrace in a lurid prostitution and obstruction of justice scandal.” Nottingham resigned last October amid an investigation of his relationship with a prostitute.