If you read the tabloids, you know that many of us lead double lives -- especially the rich and marginally famous. Take celebrity therapist Dr. Phil, for example. He's apparently being recruited by the Central Intelligence Agency.
Were that really true -- it isn't -- Dr. Phil would have good company in former Qwest (NYSE: Q ) CEO Joe Nacchio. Allow me to explain. Authorities have made Nacchio the centerpiece of a federal investigation into an accounting scandal that forced the telco to restate its 2000 and 2001 earnings, which were found to be inflated by an aggregate of $2.2 billion.
Nacchio has long denied any wrongdoing in the case, but some might argue he was somewhat more fortuitous in his timing of sales of Qwest stock than your average Joe or Jane Oddlot. Nacchio's defense has been that he established a regular program of pruning to diversify his portfolio and that his hyperbolic public statements that touted the company were nothing more than optimistic puffery grounded in a naive belief that the business was just humming along. Call it the "I didn't know someone else was cooking the books" defense, if you like.
It now appears the story has changed. According to yesterday's edition of The Wall Street Journal, Nacchio's so-called pumping was motivated by the knowledge that the firm had landed secret national security contracts and was expecting to receive more. In other words: By day, he was a mild-mannered spreadsheet-touting CEO. By night, he was a back alley negotiator brokering secret deals with government spooks promising to increase sales and earnings for years. Call it the "I could tell you but I'd have to kill you" defense.
Although the Journal story doesn't say so, Nacchio's lawyers, if they go this route, will be arguing in effect that he was, at best, a simpleton. After all, he's said he was overly optimistic in his public statements about the business.
There are two potential conclusions. At worst, Nacchio engaged in his share of impropriety, as certain press reports have alleged. At best, he seems to have been acting in his own self-interest. But in retrospect, neither scenario casts him in such a favorable light, and neither approach made common stockholders much money.
Don't hang up yet. We've got related Foolishness for you:
- Get the skinny on Nacchio's original defense.
- Nacchio keeps bad company when it comes to cheating investors.
- Remember when this all started?
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Fool contributor Tim Beyers still thinks the sight of the Qwest building at night makes for a nice addition to Denver's skyline. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.