Judge orders ex-Qwest CEO Nacchio to pay $52M

The prison term is just shy of what prosecutors hoped for -- they recommended earlier this month that he serve more than seven years.

In April, a federal jury convicted Nacchio of insider trading. According to the indictment, Nacchio sold Qwest stock after he was warned that the company was underperforming and wouldn't meet its financial targets.

Nacchio was CEO of Qwest from 1997 to 2002. In 2005, the U.S. Securities and Exchange Commission charged Nacchio with fraudulently boosting the value of company stock by exaggerating information about the company's network.

Some longtime employees blame Nacchio for essentially wiping out their retirement savings. Under Nacchio's tenure, the company pension fund dropped from $5 billion in value to a slight deficit, said Eldon Graham, a retired Qwest employee who is active in the Oregon and Washington Pension Equity Council. That drop in value happened in part because the company dipped into the fund to pay severance to employees it was encouraging to retire, he said.

Beyond the pension fund, other retirees who had allocated 401(k) investments heavily in the company claim that they lost hundreds of millions of dollars when the value of Qwest's stock dropped.

"I'm satisfied with the outcome of this case," Graham said. "What he receives is probably well deserved." Graham, who had other investments that helped protect him, corresponds with some former employees who are struggling in retirement and are far angrier and bitter than he is, he said.

Friday's sentencing isn't the end of Nacchio's legal woes. He still faces the outcome of the SEC investigation. "That may have a much larger impact than the criminal case" in terms of dollar amount, Graham said.

This story was updated on July 27, 2007.