CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

[verdo]

I hope i don't offend the American users when I say this, but the American justice system is turning into a huge joke..

[shiny!]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

Thanks for posting this. I've been saying for a long time that the United States has become a police state, we just disguise it better than the old Soviet Union did. As long as people behave and color inside the lines, the illusion of freedom will continue.

[verdo]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

Thanks for posting this. I've been saying for a long time that the United States has become a police state, we just disguise it better than the old Soviet Union did. As long as people behave and color inside the lines, the illusion of freedom will continue.

No problem. Imagine how happy this guy must be that snowden leaked all this stuff about the NSA. Back in 2001 before even 9/11 happened, this guy must have looked like a kook when he tried to bring this to the attention of people. And considering that this was the first time i heard about this guy, I imagine he got literally no coverage for what he did (which was 100% the right thing). And to take him down on "insider trading" of all things...I mean give me a break...

[LorenS]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

I hope i don't offend the American users when I say this, but the American justice system is turning into a huge joke..

I'm only offended because you called it a joke. Laugh if you can, It's no joke if you have to live under it. It's pathetic.

[DSpencer]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

I hope i don't offend the American users when I say this, but the American justice system is turning into a huge joke..

It doesn't offend me. I don't know how it compares in a relative way to the rest of the world, but it's certainly a joke to me. I can't help but feel that there are just too many people who don't have a clue and don't care. Or people like me who actually try to care less because it's too stressful to get worked up about it.

[c1ue]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

Nice story, but it would be cleaner and more believable if Qwest hadn't also been involved in an Enron/Worldcom style accounting scandal.

http://www.sec.gov/news/press/2004-148.htm

Washington, D.C., Oct. 21, 2004 — The Securities and Exchange Commission today charged Qwest Communications International Inc., one of the largest telecommunications companies in the United States, with securities fraud and other violations of the federal securities laws. The Commission’s complaint alleges that, between 1999 and 2002, Qwest fraudulently recognized over $3.8 billion in revenue and excluded $231 million in expenses as part of a multi-faceted fraudulent scheme to meet optimistic and unsupportable revenue and earnings projections.

[newnewthing]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

Nice story, but it would be cleaner and more believable if Qwest hadn't also been involved in an Enron/Worldcom style accounting scandal.

http://www.sec.gov/news/press/2004-148.htm

Agreed.

WCOM, in particular did similar things. Enron played a lot of "off the books" games that blew up. Wild and wooly times back in the last great tech bubble. There were actually a fair number of CEO's and CFO's that went to prison. You can and will get sued for securities fraud because your stock drops when things like federal contracts evaporate but me thinks this wasn't the reason he went to the big house. That's not the prerogative of the civil shareholder suits or the SEC but of a case that's been referred to the DOJ.

This kind of revenue pumping where people bought and sold to each other just to raise revenues so they could show growth was endemic and grossly illegal and had nothing to do with govt. contracts.

When the demand for IRUs declined, Qwest engaged in IRU “swaps” whereby Qwest bought IRUs from other companies in exchange for agreements from those companies to buy IRUs from Qwest.


That doesn't make the kind of near extortion the NSA attempted any better but it really wasn't the proximate cause of the guy's problems.

[c1ue]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

That doesn't make the kind of near extortion the NSA attempted any better but it really wasn't the proximate cause of the guy's problems.

For that matter, it is far from clear that the 'NSA extortion' actually existed in this case. For something like that, evidence would be nice - especially since gag orders prevent anyone from even talking about it.

Naccio might well have been screwed over in his securities fraud case.

The fact that long line drawn between said securities fraud conviction and the 'NSA extortion' just happens to skip the control fraud makes me wonder if this is just revisionism at work.

For that matter, Cenk isn't a credible source to me.

[newnewthing]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

I reviewed some of the older reports of this. They came out in 2006 at which time QWest would have known it was being investigated for fraud. I don't think there was any gag order at the time the purported NSA threat occurred. It was at a time QWest was engaged in classified activities and presumably was a friendly request. Also the "threat" was reported as a suggestion that QWest could lose future classified work. That really doesn't seem unreasonable as the NSA no doubt believed it's activities proper. What would they be expected to do, continue with classified contracts? So I do think that describing it as extortion is dubious and may not have been the case.

That said, QWest engaged in some major fraud and the conviction was in line with other companies I followed that went way over the line. I don't see any evidence that QWest was handled more severely than others nor do I see any indication they were pursued as a result of loss of govt. contracts. That would result in business loss but the charges were pretty unrelated to that. Because of that I don't fault the judge from disallowing this subject at trial.

[DSpencer]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

I reviewed some of the older reports of this. They came out in 2006 at which time QWest would have known it was being investigated for fraud. I don't think there was any gag order at the time the purported NSA threat occurred. It was at a time QWest was engaged in classified activities and presumably was a friendly request. Also the "threat" was reported as a suggestion that QWest could lose future classified work. That really doesn't seem unreasonable as the NSA no doubt believed it's activities proper. What would they be expected to do, continue with classified contracts? So I do think that describing it as extortion is dubious and may not have been the case.

That said, QWest engaged in some major fraud and the conviction was in line with other companies I followed that went way over the line. I don't see any evidence that QWest was handled more severely than others nor do I see any indication they were pursued as a result of loss of govt. contracts. That would result in business loss but the charges were pretty unrelated to that. Because of that I don't fault the judge from disallowing this subject at trial.

I'll take your word that QWest was truly guilty of fraud. However, what basis did the NSA have to believe its activities were proper? Also, is Jon Corzine still not in jail...?

[LorenS]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

If there was fraud involved why only the insider trading charges?
In light of how much fraud was going on during that time why so few convictions? Why have there not been convictions for the mortgage bubble? There was so much open fraud in the housing markets during the early 00's it's amazing they think we didn't notice.

[newnewthing]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

If there was fraud involved why only the insider trading charges?
In light of how much fraud was going on during that time why so few convictions? Why have there not been convictions for the mortgage bubble? There was so much open fraud in the housing markets during the early 00's it's amazing they think we didn't notice.

Insider trading is easier to prove (though still not easy) than most other kinds of company accounting fraud. This is a real issue with juries since anyone that actually has any accounting knowledge will get bumped. There were still a lot of people convicted, largely from exposure subsequent to the 2000 meltdown. As for the mortgage fraud issue, it's an extremely complex problem involving insurers, mortgage brokers, securitizers, GSEs, and banks many of whom were considered too big to fail. A lot of what the government had businesses do to prevent collapse would have been illegal in normal times. It was, and largely still is, a huge, broken mess.

This is a good summary of the criminal case and the "secret contracts that didn't happen" wasn't a part of it.

http://webcache.googleusercontent.co...&ct=clnk&gl=us

The full scope of QWest's problems is available from the SECs case but much of it will not be understandable from lay peeps.

Joe's conviction has been overturned due to exclusion of an expert witness which was later reversed. Both by 1 vote margins. His sentence was reduced to under 4 years served.

[c1ue]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

I don't think there was any gag order at the time the purported NSA threat occurred.

Given that the NSA was already seeking access to data before 9/11/2001 - it is not credible to think that there weren't gag orders already in place years before the 2004 Qwest control fraud prosecution.

http://www.bloomberg.com/apps/news?p...d=abIV0cO64zJE

The U.S. National Security Agency asked AT&T Inc. to help it set up a domestic call monitoring site seven months before the Sept. 11, 2001 attacks, lawyers claimed June 23 in court papers filed in New York federal court.

It was at a time QWest was engaged in classified activities and presumably was a friendly request. Also the "threat" was reported as a suggestion that QWest could lose future classified work.

Such an assertion is easily proven - say with publication of documents showing such threats and/or 'requests'.

As I noted earlier - it isn't that Naccio can't be telling the truth.

It is that someone who presided over a gigantic control fraud scandal - who was then put in jail for successfully selling out before said control fraud tanked his company's stock price... let's just say I personally set the credibility bar higher for such a person.

Compare Naccio's behavior with, say, Ladar Levison - quite a contrast.

If there was fraud involved why only the insider trading charges?

Because Qwest settled - paying out a huge stash of cash.

There definitely were charges filed:

http://www.sec.gov/news/press/2005-36.htm

The Securities and Exchange Commission today charged Joseph P. Nacchio, former co-chairman and chief executive officer of Qwest Communications International Inc., and eight other former Qwest officers and employees with fraud and other violations of the federal securities laws. In three separate but related civil actions, the Commission alleges that, between 1999 and 2002, the Qwest defendants engaged in a multi-faceted fraudulent scheme designed to mislead the investing public about the company's revenue and growth.

The settlement:

http://www.washingtonpost.com/wp-dyn...2004Oct21.html

Qwest Communications International Inc. yesterday agreed to pay $250 million to settle Securities and Exchange Commission charges that the company fraudulently booked $3.8 billion in revenue over nearly three years, repeatedly turning to accounting tricks that employees compared to a heroin "addiction."

Qwest employees carried out an extensive fraud, under orders from senior managers who made "outrageously optimistic" assertions that the Denver company would post double-digit profit gains at a time when demand sharply lagged, regulators alleged. The SEC is continuing to investigate the role of individuals in the scheme.

Note also there were a slew of civil lawsuits filed as well.

[newnewthing]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

c1ue,

There is much confusion out there about the SEC's powers and, contrary to popular belief, they have no criminal powers. The SEC charges were in a civil suit. The SEC only files suits for the most egregious cases and leaves the rest for the class action dudes. Of course they always pile on as well.

As for "gag orders" I'm sure Joe had signed the usual papers associated with getting a security clearance. His ability was as restricted as anyone else operating in that arena.

Joe's arguments as reported circa 2006 were that only he was aware of the NSA's requests and so his optimistic biz projections were not unreasonable. That doesn't explain why he sold stock subsequent to the NSA conversations and "threats" while continuing to support prior earnings projections.

[c1ue]

Re: CEO Who Resisted NSA Spying in 2001 FINALLY out of jail...after 4.5 years...

There is much confusion out there about the SEC's powers and, contrary to popular belief, they have no criminal powers. The SEC charges were in a civil suit. The SEC only files suits for the most egregious cases and leaves the rest for the class action dudes. Of course they always pile on as well.

All correct - but does this not highlight the seriousness of what went down at Qwest?

As for "gag orders" I'm sure Joe had signed the usual papers associated with getting a security clearance. His ability was as restricted as anyone else operating in that arena.

Certainly may be true - but again, not sure what this has to do with Naccio's supposed stand for privacy or whatever as is positioned by Cenk in the video above.

Joe's arguments as reported circa 2006 were that only he was aware of the NSA's requests and so his optimistic biz projections were not unreasonable. That doesn't explain why he sold stock subsequent to the NSA conversations and "threats" while continuing to support prior earnings projections.

Note that I didn't even refer to the insider trading allegations. The Enron style accounting - there seems little doubt it occurred, equally that it occurred under Naccio's watch.

So either he's a really incompetent CEO who doesn't know anything about how his own company is run and is also an upstanding advocate for privacy - or he's a guy who got caught with his hand in the till and is now doing a little damage control.

I know which looks more likely to me, but YMMV.