Lawsuits Dropped Setting The Record Straight
Joseph Nacchio, the former Qwest CEO convicted of insider trading, has found legal victories difficult to come by for the past decade, but he won a $14.17 million jury verdict in Morris County on Jan. 7.
Following several weeks of trial before Superior Court Judge W. Hunt Dumont, a jury found in Nacchio’s favor in a suit claiming he was induced years ago to make a faulty investment with the Ayco Co., a financial advisory firm that’s now a subsidiary of Goldman Sachs.
Ayco, for its part, has disputed the claims and now promises to appeal.
Nacchio, though he’s maintained his innocence, spent four-and-a-half years in prison and paid almost $70 million in penalties following his conviction on charges that he deceived Wall Street analysts by hiding Qwest’s money troubles while cashing in his own stock options.
He was a high-ranking executive at AT&T before leaving in 1997 to join Qwest Communications International of Denver, then a young telecommunications company. He later become CEO, brought the company public and accumulated massive personal wealth in the process.
New Jersey-based Ayco had been working with Nacchio for several years when, in 2000, he invested about $4.5 million in an “estate enhancement plan” with the help of Ayco adviser David Weinstein, the suit claimed.
According to a court document and Nacchio’s lawyer, Bruce Nagel, the investment instrument was made up of two life insurance policies.
It was Nacchio’s understanding that the policies would provide about $95 million in benefits upon his death, to satisfy the massive inheritance tax to which his estate would be subject, Nagel said.
Nacchio also understood those policies would cover him up until age 100, but in reality, they would have lapsed once he achieved the age of 72, leaving him uninsured, according to Nagel.
The issue was discovered in 2010, at which time Nacchio—already convicted, serving time and going through appeals in his criminal case—was forced to withdraw his original $4.5 million investment, the suit claimed, according to Nagel.
In the meantime, Ayco was purchased by Goldman Sachs.
Nacchio in 2010 spent the $4.5 million—as well as millions more, for a total of about $30 million—to purchase the sort of estate enhancement plan he wanted in the first place, Nagel said.
As for damages, the suit, filed in 2010, claimed it would have cost Nacchio about $15 million in 2000 to buy the life insurance policies he thought he was getting through Ayco.
In addition to Ayco, Weinstein was a named defendant. Nacchio’s wife, Anne Esker, also was a plaintiff.
Read more: http://www.njlawjournal.com/id=1202746564418/ExCon-CEO-Wins-14M-Verdict-in-Suit-vs-Goldman-Subsidiary#ixzz3wqXUDTIA