DENVER - Former Qwest CEO Joe Nacchio and his wife scored a win this week in their attempt to recover nearly $18 million in forfeitures related to his 2007 criminal insider trading conviction.
Nacchio claims the $44.6 million in stock sale gains he forfeited is deductible as a business expense or loss and, thus, he is entitled to a refund of the $17.97 million in taxes paid on those sales.
The federal government argues that granting Nacchio's request for a refund "would contravene public policy by 'reducing the sting' of the forfeiture penalty," according to a ruling issued Wednesday by U.S. Court of Federal Claims Judge Mary Ellen Coster Williams.
Williams rejected that argument and partially granted Nacchio's motion for summary judgment.
"Allowing the deduction would not increase the odds in favor of insider trading or destroy the effectiveness of the securities laws," Williams wrote. "The law under which Mr. Nacchio was convicted ... has ample weapons to combat insider trading without adding taxation of unretained income to the arsenal."
Nacchio still has to show that "he had a claim of right to the trading proceeds" to secure the refund.