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Ex-Qwest CEO Indicted for Insider Trading

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Thinkpad (AXcess News) Denver - Ex-Qwest CEO, Joseph Nacchio, was indicted by a grand jury Tuesday for insider trading in the telco giant he helped build. Nacchio was charged with insider trades of $100.8 million in Qwest Communications International, Inc. (NYSE: Q) stock at a time when he was also credited with Qwest losing over $100 billion in market value.

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Microsoft I first wrote about Joseph Nacchio in 2002 for AXcess News as one of my first assignments and at the time, my standing on a soapbox and shouting foul seemed to land on deaf ears. Seems persistence wins out in the long run and there is value in the U.S. judiciary system after all. But that does little for the thousands of ex-Qwest employees who lost their job thanks to Nacchio's handy work, let alone the tens of thousands of investors who saw their hard-earned investment dry up.

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Laptop Computers It only took three years for federal prosecutors to complete their investigation, buta today, federal grand jury finallycharged Nacchiofor making 42 illegal trades of Qwest stock between Jan. 2, 2001, and May 29, 2001. The charges each carry a maximum penalty of 10 years in prison and a fine of up to $1 million. Prosecutors also want Nacchio, 56, to forfeit the $100.8 million in stock proceeds, the indictment says.

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Laptop Computer In June, 2002 when federalsecurities regulatorsbegan probing into Qwest's audit practices Nacchiowas musteredfrom the board of directors over accusations of his mis- management. At the time, Nacchio had served as Qwest's chief for over five years. His biggest move in expanding was to acquire US West, which cost many of the telephone company's workers their jobs, though to this day, US West remains Qwest Communications saviour. Without it, Qwest would have followed in the footsteps of WorldCom and disappeared forever.

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Desktop Computer In 2000, when Nacchio moved to acquire US West he is accused of inflating the value of Qwest's shares. Nacchio closed the deal, paying $44 billion for the company.

Notebooks Prosecutors say they were eyeing Nacchio from the start of their investigation into insider trading over a period of time when employees of Qwest who had knowledge of material non-public information were barred from selling Qwest shares.

Lenovo The federal grand jury indictment charged Nacchio with selling 196,723 shares on Jan. 2, 2001, for $7.8 million, another on April 26, 2001, of 350,000 shares for $13.6 million, and a third of 300,000 shares the next day for $11.9 million.

Hard Drive Nacchio knew that Qwest's revenue was shrinking as an over-abundance of fiber optic cable around the country was dropping communications rates nationwide for all the communications companies and that the company was unable to close the gap during the periods when he sold shares.

Travelstar The indictment went on to say that Nacchio was repeatedly reminded of the policy and advised that selling Qwest's stock while in possession of such information was a crime.

Gateway But Nacchio wasn't alone in the investigation. Six other Qwest executives were also involved that were charged by prosecutors. What sunk Nacchio was the testimony of formerCFO Robin Szeliga who plead guilty in July to insider trading and agreed to cooperate with investigators.

Laptop Parts In addition to the charges by the federal grand jury today, the Securities and Exchange Commission also sued Nacchio in March, claiming he orchestrated a $3 billion fraud from 1999 to 2002 at Qwest.

Software Qwest agreed to settle with the SEC over fraud charges last year, having paid $250 million at that time.

Hard Drives U.S. Attorney William Leoneoutlined Nacchio's charges at a press conferencein Denver Tuesday.

Electronics Nacchio has denied all charges.

Canon Herbert Stern, the attorney representing Nacchiodeclined to comment until after Nacchio makes his initial appearance in the case later today before a magistrate.

Desktop Pc Shares of Qwest were down 13 cents, or 2.25%, at $5.64 at 3:51pm EST Tuesday following the news of Nacchio's indictment on insider trading charges.

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