Closing Arguments: Stern attacks the prosecution's case on multiple fronts

Herbert Stern continued the defense’s closing arguments this morning. It was obvious from the outset that Stern brought his “A-game” with him today, delivering a poignant and well spoken argument. His argument was broken up into; discrediting of key government witnesses, refuting the prosecution’s charges regarding Nacchio’s January 2-3, 2001 stock sales, focusing on the Mohebbi memos as the entire basis of the government’s case, and claiming that Nacchio was not told that the company needed to change its guidance in April and May.

Stern systematically attacked the credibility of several key government witnesses. He accused Lee Wolfe of lying on the stand about a meeting just prior to the announcement of the Qwest/USWest merger, pointed out that Szeliga engaged in insider trading in order to remodel her kitchen, and emphasized Mohebbi’s lack of authority or expertise in the Qwest financial projection process. Stern also repeatedly told the jury which witnesses had refused to meet with the defense team prior to the trial.

One of the most notable points of Stern’s argument had to do with the two memos to Nacchio from Mohebbi. Stern claimed that the government’s entire case for the sales in early January is based upon these two memos, reading to the jury portions of the indictment that allegedly quote the memos with phrases like “huge stretch” and “track record.” He went on to argue that these two memos did not involve public financial estimates; that their purpose was to decentralize power, taking some away from Nacchio and giving more to Mohebbi and Steve Jacobsen, something that would help the company meet its earning targets. Stern went on to emphasize that Nacchio would not have traded on the basis of this memo, stating, “Could this memo not be found, or its moral equivalent, in any of the top dozen companies in the United States?”

Stern spent a great deal of time on the first two counts of the indictment; the January 2-3, 2001 stock sales. Stern argued that these sales were predetermined by Nacchio and that this was documented by his financial advisor, Weinstein, along with Yash Rana. He also claimed that the value of this stock grant was in no way tied to the value of Qwest stock; instead, Nacchio was to receive $24m worth of Qwest stock regardless of individual share price at the time.

Towards the end of the morning, Stern moved further ahead chronologically to the periods of February-May 2001. He brought up the April 9, 2001 meeting attended by Nacchio, Szeliga, and Mohebbi at which Nacchio was told that the company was on track to make its public earnings targets even though it was behind the internal estimates. Stern used this to hammer home the idea that Nacchio was not being told anything different than the public in regards to Qwest earnings targets.

Check back later today for a wrap up of the arguments from this afternoon.