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A rare turn in the spotlight

The Baltimore Sun

DENVER -- Denver oil billionaire Philip Anschutz has given few media interviews since the mid-1970s. Friends describe him as intensely private.

But Anschutz will step into the spotlight during the next few weeks as a key witness for former Qwest chief executive Joseph P. Nacchio, who is on trial for alleged insider trading.

"There's really no place to hide in that courtroom," said Tony Leffert, a former federal prosecutor and a lawyer with Robinson, Waters & O'Dorisio in Denver. "Nobody likes to testify in a case like this."

Central to the testimony will be the once-close relationship between Anschutz, who bet his fortune on a high-tech vision for Qwest, and Nacchio, the aggressive telecommunications executive he hired to build his company.

Nacchio attorney Herbert Stern said Anschutz will testify about how he lured the No. 3 AT&T; executive to Qwest in 1997 through a combination of generous stock grants and a promise that he could commute to Qwest headquarters in Denver each week from his home in New Jersey.

Anschutz "had brilliance; he had money; he had investing ability," Stern said. "But he needed somebody with the expertise to transform the company.

"Joe Nacchio did not apply for the job. Anschutz went to get him. He will take the stand and confirm this."

Stern also is likely to ask Anschutz about the terms of stock grants the Qwest board of directors awarded Nacchio.

Those terms required Nacchio to sell his shares or lose them in some cases, or to sell them for a predetermined value in others, according to Stern. That gave Nacchio no motivation to withhold inside information that would have pushed down the stock price, as the government alleges, Stern said.

Some of these issues may come up in government testimony. Former Qwest board member Craig Slater, who works for Anschutz, is a potential prosecution witness.

Anschutz was loyal to Nacchio until mid-2002, when investor confidence had disappeared and the stock had fallen to an all-time low. Anschutz helped find a replacement - current chief executive officer Richard C. Notebaert - and flew to New Jersey in June 2002 to inform Nacchio of the board's decision to replace him.

But the men have given different accounts of their relationship since then.

In October 2002, Nacchio told congressional investigators, "I spoke to Phil two to three times a week. Every major decision I made at this firm, I sought his counsel. I always went to Phil Anschutz when I needed counsel. Many times, I would get calls from Phil just to find out what was going on. Phil was very involved. He was helpful to me. Phil managed the relationship with the board."

But in his account of their relationship, Anschutz told congressional investigators that he did not regularly speak with Nacchio about Qwest's big deals: "No detail. We might have. I don't recall."

How prosecutors handle Anschutz on cross-examination will depend on how much damage he does to their case during direct questioning, Leffert said.

"If there is damaging testimony from him, the cross-examination is going to be head-on and the prosecution is going to be vigorous," he said. "They will try to undermine his testimony, and then they'll attack his credibility."

Anschutz relinquished his chairmanship of the board when Nacchio departed, and he has recently entered into sales contracts that will eliminate his ownership of Qwest, which is less than 20 percent of the company.

Anschutz has appeared before a federal grand jury in the government's investigations into Qwest. He was not named as a target, and he was not charged with any wrongdoing.

In 2003, the Anschutz Co. paid $4.4 million to settle a lawsuit by then-New York Attorney General Eliot Spitzer alleging that it gained unjust profits from the sale of Qwest stock as well as initial public offering shares issued to it by Solomon Smith Barney.

Despite agreeing to the settlement, the Anschutz Co. strongly maintained it had done nothing improper with respect to its limited sales of Qwest stock and its receipt of IPO shares as a major investment organization.

Nacchio paid $400,000 to settle similar charges.

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