USA TODAY US Edition
Convicted former CEO of Qwest sues his lawyers over his bill
The former CEO of Qwest Communications on Wednesday sued the lawyers who represented him in his insider-trading case, claiming they “grossly overbilled” him and sought payment for staff breakfasts, underwear and in-room movies.
The malpractice lawsuit filed by Joseph Nacchio in state Superior Court in Newark accuses Herbert Stern and the law firm of Stern & Kilcullen of negligence and seeks more than $25 million in compensatory and punitive damages, as well as attorney’s fees.
A message left for Stern at his law office Wednesday was not returned.
Nacchio, 61, is serving a 70-month prison sen- tence at a federal prison in Pennsylvania after being convicted in 2007 of selling $52 million in stock in Qwest Communications based on inside information.
After an appeal of his original sentence, he also was ordered to pay a $19 million fine and forfeit almost $45 million.
“This is a really sad case,” said Bruce Nagel, the lawyer handling Nacchio’s lawsuit. “Bad lawyering resulted in a long jail sentence and $70 million in fines, and Nacchio was grossly overbilled in the process.”
The lawsuit accuses Stern of negligence in his handling of Nacchio’s trial, including the “blatant failure to comply with basic litigation procedures” that Nacchio says led to the trial judge barring the defense’s lone expert witness.
It also alleges that Stern & Kilcullen improperly used money it held in trust to pay itself unreasonable and excessive fees.
The lawsuit claims the firm sought payment for tens of thousands of dollars in breakfasts, underwear for lawyers and in-room movies during the trial in federal court in Denver.
Nacchio had indicated he might appeal again to lower the amount of his fine, but he agreed last month to drop that appeal as part of a settlement of a civil complaint the Securities and Exchange Commission brought against him.
The SEC had alleged Nacchio and others at Qwest misled investors when it reported on its financial performance from1999 through 2002.