Recap: Day 3

Today was a mixed day for the government. Lee Wolfe (head of Investor Relations) was an important witness, tying Nacchio directly into the disclosure process, emphasizing Nacchio’s decision not to reveal the use of one timers to the market (Wolfe testified that when he explained that the disclosure would result in a drop in share prices, the conversation typically ended), revealing Nacchio’s repeated assurances that Qwest was different from other companies and wasn’t suffering the same problems incurred by industry competitors, and bolstering the contention that Nacchio repeated on numerous occasions that the company would make its earnings guidance.

The direct examination was long and confusing. There were four or five key dates.  Rather than go through each methodically, drawing out the important points, Wise constantly went back and forth and allowed the witness to wander into different time periods. Judge Nottingham and John Richilano, the defendant’s lawyer handling Wolfe’s cross examination, broke in several times to complain about the absence of any specific time period. On one occasions, a frustrated Judge Nottingham indicated that he “would sustain an objection if one were made.”  While the jury likely grasped and absorbed the basic points, it is unlikely that they fully understood the time line of events.

The government also found itself, for the first time in open court, on the losing end of a Judge Nottingham lecture. Despite informing counsel on both sides about the need for advance warning of any motions that would be made first thing in the morning, the government raised an issue shortly before the trial was to begin. Judge Nottingham not only chastised the government but after hearing the objection (concerning comments made by Stern in his opening that suggested that the government had deliberately withheld the indictment from the jury), said “That’s what I mean by thumb sucking.”

John Richilano undertook the cross for the defendant. He opened with a hostile series of questions, accusing Wolfe of wanting to “get [his] story out” and answering “questions that were never asked”, a reference to times when Wolfe went beyond the precise inquiry posed by Wise. It was the wrong approach to take with someone who came across almost as a grandfather and, if exceeding the boundary of the questions asked, didn’t do it with any deliberative motive. In fact, Judge Nottingham interjected and told Richilano not to “start arguing with this witness right off the bat.”

Richilano compounded the potential mistake by asking Wolfe if he was “asked to leave” Qwest or was told by Robin Szeliga to “look for other work” to which he replied firmly “No I was not.” Richilano had no response, making the question look mistaken. It started the cross off with Wolfe probably having strengthened rather than weakened his credibility.

The cross at times seemed to lose its audience, with considerable amounts of time spent reviewing meetings Nacchio did not attend and going over projection disclaimers emphasizing the uncertainty of forward looking statements.  Indeed, at the close of the day, Judge Nottingham admitted to reading a defense counsel motion during the cross.

By day's end, Wolfe came across as a credible, believable witness.  In answering questions, he often paused to think them over and never took the bait by responding the counsel's umbrage.  His answers were thoughtful; he often admitted when he didn't know something.   We will see tomorrow as cross continues whether any of this changes.