Corporate Governance

United States v. Joseph Nacchio: Evidentiary Hearing Needed for the Court to Properly Determine Gain

By Charles Nichols

As part of the Race to the Bottom's continuing coverage of Joseph Nacchio's criminal trial, a group of student contributors attended the first hearing in his resentencing on February 18, 2010.  This hearing was at the United States District Court for the District of Colorado, before Judge Krieger.  The parties jointly requested this hearing, hoping Judge Krieger would rule on the gain element of Mr. Nacchio's sentence without any further proceedings on the issue.  Judge Krieger saw the issue differently.

Judge Krieger opened the proceeding by asking the parties why they asked for the hearing.  Based on remarks in the Joint Statement Regarding Sentencing Procedures, both the Government and Nacchio's defense counsel contended that they believed Judge Kreiger could determine 'gain' based on the motions provided.   Judge Kreiger addressed this issue by stating she had reviewed the 1600+ pages of pleadings.  She explained that after a thorough examination of all of the information, there were numerous outstanding issues that require an evidentiary hearing. 

Judge Krieger stated that although the disgorgement analysis mentioned by the 10th Circuit will act as the guidepost for determining gain, the facts of this case do not fit neatly into that analysis.  When discussing the reports prepared by experts for both the Government and Mr. Nacchio, Judge Krieger noted the two experts used almost identical methodology in their calculations.   What made the experts' analyses differ were the facts and assumptions throughout their calculations.   Among those differences were the conflicting dates of disclosure used by the experts and the affects of the September 11, 2001 terrorist attacks in relation to Nacchio's disclosure on September 10, 2001.  As a last note, the court found the expert reports were attempting to proffer legal arguments and therefore, on their own, not a sufficient basis for her to make a ruling on gain.

The court concluded by setting an evidentiary hearing for April 21-22, 2010 in order to flesh out the analysis and rule on gain.  The parties agreed that the only two witnesses at this hearing will be their experts and that the previously filed reports will account for the majority of the direct testimony, followed by cross, redirect and questions from the court.  The court stressed its desire for a brief argument and that the court did not need further briefing beyond the already submitted 1600 pages.   Lastly, Judge Kreiger will announce an oral ruling on the gain issue at or shortly after the hearing's conclusion. This ruling will determine the appropriate sentencing range under the Federal Sentencing Guidelines.

The court also set Mr. Nacchio's final resentencing hearing for June 24, 2010.  In this hearing Judge Kreiger will hear arguments regarding the requirements of 18 U.S.C. § 3553(a), which direct the court to consider a list of factors before determining the final sentence. 

Just before Judge Kreiger concluded the February 18^th hearing, she asked Mr. Nacchio's counsel if Nacchio wished to exercise his constitutional right to appear at the resentencing hearings, which his attorney attempted to waive.  The Government objected, seemingly insisting upon Mr. Nacchio's attendance.  Judge Kreiger gave Nacchio 14 days to advise the court of whether he wishes to waive his right to appear.  The U.S. Attorney will have 10 days from the date of that filing to object to Mr. Nacchio's decision.

Primary materials are located at the DU Corporate Governance website. 

Full post as published by The Race to the Bottom on February 22, 2010 (boomark / email).