Tuesday, February 05, 2008

SEC Could Shelve Nacchio Case Due To 'National Security Matters'

Raymond McConville writes on Light Reading:

Federal Magistrate Judge Craig Shaffer has recommended to the Securities and Exchange Commission (SEC) that it drop the civil fraud charges against five former Qwest Communications International Inc. executives including former CEO Joseph Nacchio.

The recommendation comes because the case involves government state secrets -- evidence that's not admissible in a civil court because it would jeopardize national security.

The SEC has agreed to Judge Shaffer's recommendations and now has 30 days to review the case. It could decide to dismiss the case altogether or narrow the charges to Qwest's transactions with private companies.

The information in question involves Qwest's alleged use of capacity swaps to fraudulently boost revenues. The SEC says two thirds of the capacity Qwest purchased in these swaps was not needed. But Nacchio has maintained he had knowledge of lucrative classified government contracts that Qwest was going to land which would have made the excess capacity necessary.

More here.

Note: In other words, the Bush Administration doesn't want Nacchio to upset the apple cart by divulging that his company, Qwest Communications, was approached (and refused to participate without a judicial mandate) to participate in the illegal NSA wiretapping activities which are now being challenged in the courts. -ferg


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