Nacchio appeal says trades not based on inside data

By Martha Graybow

NEW YORK, Oct 10 (Reuters) - A lawyer for ex-Qwest Communications International Inc (Q.N) CEO Joseph Nacchio has asked for his insider trading conviction to be overturned, arguing there was insufficient proof that he sold millions worth of shares based on material inside knowledge.

In appeals court papers, a Nacchio lawyer called the case "an unprecedented prosecution" and asked that the conviction be reversed or that the former chief executive at least be granted a new trial before a different judge.

In April, a Denver federal jury found Nacchio guilty of 19 of 42 counts of insider trading. Prosecutors had accused him of unloading $101 million of Qwest shares after company insiders warned him that the phone carrier could not meets its financial targets.

"The extraordinary charges here are based on the claim that Nacchio knew, eight months or more in advance, that Qwest might not make its year-end 2001 financial projections," defense attorney Maureen Mahoney wrote in an appeals brief filed on Tuesday with the U.S. Court of Appeals for the 10th Circuit.

"Counsel is aware of no other case where the government has predicated a criminal charge of insider trading on predictions about financial results for future quarters," she wrote.

Nacchio was sentenced in July by U.S. District Judge Edward Nottingham to a six-year prison term, fined $19 million and ordered to forfeit $52 million.

The appeals court in August allowed Nacchio to remain free on bail pending the outcome of his appeal. Oral arguments in the case are set for Dec. 18.

In the 58-page appeals brief, Nacchio's defense lawyer also argued that the trial court jury received incorrect instructions and that the court wrongly excluded a defense expert witness from testifying. The lawyer also says Nacchio's prison sentence should be reduced because it was incorrectly calculated.

Denver-based Qwest became the target of federal prosecutors and U.S. regulators in 2002 after it restated $2.2 billion in revenue for the previous two years. Nacchio was CEO from 1997 to 2002. (Reporting by Martha Graybow)