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June 27, 2007

Qwestions about victim input at sentencing of former Qwest CEO

As detailed in this news article, the upcoming sentencing of former Qwest CEO Joe Nacchio is raising interesting questions about the role of victims in white-collar sentencing proceedings:

Federal prosecutors on Tuesday requested a process for notifying "victims" so they could exercise their right to be "reasonably heard" at the July 27 sentencing of former Qwest CEO Joe Nacchio.  In a U.S. District Court filing in Denver, prosecutors wrote that Congress requires courts to establish such a procedure, as long as it is reasonable and "does not unduly complicate or prolong the proceedings."

Defense attorney Mark Rufolo argued at a status conference in late May that federal statute prohibits victim statements in such a case.  Prosecutors at that time indicated there likely wouldn't be statements by victims, or people who bought stock at the time Nacchio was making his illegal sales and who later suffered big losses....

Government prosecutors acknowledged in their filing that the U.S. Sentencing Commission has concluded that "victims and their losses are difficult if not impossible to identify" in insider-trading cases.  For example, it's virtually impossible to know exactly which Qwest shareholders bought the exact 1.33 million shares of stock Nacchio sold during the period in question. But stockholders who made investment decisions during the insider-trading period and were affected by Nacchio's conduct also may be considered victims, prosecutors wrote. Qwest itself could be considered a victim, prosecutors added.

Prosecutors requested that a number of actions be taken to reasonably notify victims, including putting information on the U.S. attorney's office Web site, sending a letter to a class-action shareholders group, writing letters to Qwest and the Association of U S West Retirees, and publishing notices in daily newspapers.

Nacchio's lead attorney, Herbert Stern, said Tuesday his team would file a response to the government's motion in "due course."

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June 27, 2007 at 09:10 AM | Permalink

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