A federal appeals court ruled Wednesday that former Qwest Communications CEO Joe Nacchio can remain free on bond while he appeals his insider-trading conviction.
Nacchio was sentenced to six years in prison on July 27 after a jury convicted him of 19 insider trading counts stemming from the sale of $52 million worth of stock.
His lawyer, Herbert Stern, said Wednesday's order from the 10th U.S. Circuit Court of Appeals means Nacchio will remain out of prison on the same $2 million bond that was in effect during his trial.
Defense attorneys have said they plan to raise several issues on appeal, including jury instructions, the exclusion of a defense witness' testimony and U.S. District Judge Edward Nottingham's decisions related to classified information about Qwest's business dealings with the government.
At the sentencing hearing, Nottingham had refused to let Nacchio remain free during appeal. The 10th Circuit overturned that order and said Nacchio's case would be expedited.
U.S. Attorney Troy Eid expressed disappointment but said he was glad the appeal would be heard quickly.
"We hope the defendant will start serving his sentence as soon as possible," he said.
Stern said the defense team was gratified by the appeals court ruling "and we look forward to the main appeal."
Under the schedule laid out by the appeals court, Nacchio would remain free at least through mid-December, when oral arguments will be heard. The court didn't set a specific date for that hearing, and it wasn't clear how soon a ruling would come after that.
The court said Nacchio's attorneys must file their appeal by Oct. 9 and the government must respond by Nov. 9. Nacchio could also chose to file a response to that by Nov. 20.
The judges warned that under the expedited schedule, any request by either side for more time "will be viewed with disfavor."
Nacchio was charged with 42 counts of insider trading for selling stock at a time when Qwest managers were warning that the company faced financial risks because it was relying on money from one-time sales to meet revenue targets. The information was concealed from investors.
A U.S. District Court jury in Denver acquitted Nacchio of 23 counts but convicted him of 19 counts involving transactions that occurred in April and May 2001. Besides the six-year prison sentence, Nottingham also sentenced Nacchio to pay a $19 million fine and forfeit $52 million in assets.
Thousands of investors lost money as the stock price for Qwest, a primary telephone service provider in 14 mostly Western states, dropped from more than $60 a share in 2000 to just $2 a share in 2002. The company was forced to restate $2.2 billion in revenue.
In a related case, Nacchio and four other ex-executives of Qwest Communications International are named in a civil fraud lawsuit filed by the Securities and Exchange Commission. The SEC case is not expected to be set for trial until 2009.