* Ex-Qwest CEO's 6-year prison term reinstated
* Court rules 5-4 affirming insider trading conviction
* Revokes Nacchio's release on $2 million bond
* Finds expert testimony was properly excluded
(Adds defense attorney statement)
By Robert Boczkiewicz and Gina Keating
DENVER/LOS ANGELES, Feb 25 A U.S. appeals court
affirmed the insider trading conviction of former Qwest
Communications International Inc (Q.N) Chief Executive Joseph
Nacchio, finding that a trial court properly excluded expert
witness testimony that Nacchio deemed crucial to his case.
The 5-4 decision by the full 10th U.S. Circuit Court of
Appeals reinstates Nacchio's conviction and his six-year prison
sentence and revokes his release on $2 million bond.
Acting U.S. Attorney David Gaouette said in a statement
that the opinion "reaffirms what the government has believed
from the beginning, that the jury verdict finding Mr. Nacchio
guilty was indeed correct."
Nacchio's attorney Maureen Mahoney said the defense team
was "profoundly disappointed" by the opinion and will ask the
U.S. Supreme Court to review the case.
"Not only was the court intensely divided, with four of the
nine judges concluding that Mr. Nacchio was denied a fair
trial, but the majority's decision is in conflict with the
decisions of other courts of appeal throughout the country,"
Mahoney, of Latham & Watkins, said in a statement.
A three-judge panel of the same court last year voided
Nacchio's conviction and ordered a new trial, finding that U.S.
District Judge Edward Notthingham had wrongly barred consultant
Daniel Fischel from testifying at trial as an expert witness.
Fischel was prepared to present a study of Nacchio's
trading patterns that showed they were inconsistent with
But the majority noted on Wednesday that Nacchio's
attorneys first disclosed plans to call Fischel three days
before the start of trial, giving the government inadequate
time to review Fischel's qualifications and opinions.
"The district court's exclusion of the testimony was not
arbitrary, capricious, whimsical, or manifestly unreasonable;
nor are we convinced that the district court made a clear error
of judgment," the majority justices wrote.
Dissenting justices argued that defense attorneys should
not have been penalized for "an understandable and
"Not every violation of procedural rules warrants the
nuclear option of disallowing the defense to present its case,"
the dissenters wrote.
The majority remanded the case to the original three-judge
appeals panel to hear Nacchio's challenges to the length of his
sentence and the $52 million forfeiture and $19 million in
fines ordered by Notthingham.
Nacchio was convicted in 2007 on 19 counts of insider
trading for illegally selling $52 million worth of stock six
years earlier, after company insiders warned him that Qwest
could not meet its financial targets.
His conviction was hailed as a major victory in the
government's attempts to crack down on corporate titans who
profited while their companies suffered serious financial
(Reporting by Gina Keating; Editing by Tim Dobbyn, Richard
Chang, Gary Hill)