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Put away that Nacchio cheese
By Andrew Flohr-Spence
spencand@mscd.edu

I was sitting in a hippie bar on Colfax when a heated discussion broke out between two unwashed heathens. It sounded like a fight about nachos. While I laughed for a moment, having several of my prejudices confirmed, I then realized they were speaking of something more serious.

The two had their dreadlocks in a bunch about former Qwest CEO Joseph Nacchio, who was all smiles arriving at his insider trading trial last week in Denver. Offended by something the younger man had said, the older man was saying he worked at the company for 20 years.

“That bastard stood there with a straight face and told us the company was raising their targets,” he said. “The next thing we know, they come back and tell us they overestimated by $200 million. Immediately the stock price was dropping like a rock and then they wouldn’t even let us sell our stock until it was too late.”

Meanwhile, the younger man was rolling his eyes and shaking his head, so the ex-Qwest employee spoke louder and louder.

“I lost two-thirds of my whole goddamn retirement money, man,” the man said, looking at the youth with disbelief. “That Nacchio jackass needs to rot in jail.”

Honestly, I didn’t know much about the case. All I knew was that Qwest was notorious among my friends for overcharging on phone bills.

In Denver’s own version of the Enron scandal, the former king of Qwest faces 42 counts of insider trading as a result of his suspicious sale of more than $100 million worth of Qwest stock in the months before the stock’s price crashed. At the time, Nacchio repeatedly reassured investors that the company was on the right track, only to reveal some months later that they had overstated their profit projection by $200 million. 

The investigation has since revealed an alleged web of corruption within the company and fraud to the sum of $3 billion from 1999 to 2002. Several executives, including Nacchio, were handcuffed and led off to jail. His chief financial officer pleaded guilty to one count of insider trading, and received a plea bargain in return for testifying against Nacchio.

The victims of this scandal feel like they were ripped off by scheming Nacchio and the execs of the company, while some people, like the young hippie, say the investors should have known better.

“You Qwest employees all think you deserve something, but you just got burned playing the market,” said the young man with the beard. “Everybody was losing money at that time. We all got burned.”

I didn’t think there was much to the argument that the victims were guilty of not expecting to be robbed, but having seen similar sentiment now in several opinion pieces written about the case, I feel like it needs addressing.

Nacchio is smiling in every picture you see of him because he knows he’s untouchable.  While each of his 42 counts carries a maximum sentence of 10 years and $1 million, few believe that he will receive 420 years in prison and lose $42 million if found guilty. He may have to turn over some of the cash he stole, and even serve a little Martha Stewart time, but he is still set for life with the hundreds of millions of dollars he got away with.

The people who worked 20 to 30 years diligently paying to their 401(k)s, however, now have almost nothing to show for it. If we have any sense of justice in this country, minimally protecting people’s retirement investments and adequately sentencing these vampires should be a given.