source: WIRED.com
By Ryan Singel October 11, 2007 | 6:20:59 PMCategories: NSA
Did the NSA's massive call records database program pre-date the terrorist attacks of 9/11?
That startling allegation is in court documents released this week which show that former Qwest CEO Joseph Nacchio -- the head of the only company known to have turned down the NSA's requests for Americans' phone records -- tried, unsuccessfully, to argue just that in his defense against insider trading charges.
Nacchio was sentenced to 6 years in prison in 2007 after being found guilty of illegally selling shares based on insider information that the company's fortunes were declining. Nacchio unsuccessfully attempted to defend himself by arguing that he actually expected Qwest's 2001 earnings to be higher because of secret NSA contracts, which, he contends, were denied by the NSA after he declined in a February 27, 2001 meeting to give the NSA customer calling records, court documents released this week show.
AT&T, Verizon and Bellsouth all agreed to turn over call records to an NSA database, according to reporting in the USA Today in 2006. At that time, Nacchio's lawyer publicly stated that Nacchio declined to participate until served with a proper legal order.
The government has never confirmed or denied the existence of the program, but is trying to win legal immunity for telecoms being sued for their alleged participation in the call records program and the government's warrantless wiretapping of Americans. Turning over customer records to anyone, including the government, without proper legal orders violates federal privacy laws.
Nacchio's attempt to depose witnesses and present the classified defense was declined by Colorado federal district court judge Edward Nottingham, a decision that is playing a role in Nacchio's pending appeal to the 10th Circuit Appeals court.
The allegation is peppered throughout the highly redacted documents released by the lower court today, but are most clear in the introduction to this filing (.pdf) from April 2007.
Defendant Joseph P. Nacchio ... respectfully renews his objection to the Court's rulings excluding testimony surrounding his February 27, 2001 meeting at Ft. Meade with representatives from the National Security Agency (NSA) as violative of his constitutional right to mount a defense. Although Mr. Nacchio is allowed to tell the jury that he and James Payne went into that meeting expecting to talk about the "Groundbreaker" project and came out of the meeting with optimism about the prospect for 2001 revenue from NSA, the Court has prohibited Mr. Nacchio from eliciting testimony regarding what also occurred at that meeting. [REDACTED] The Court has also refused to allow Mr. Nacchio to demonstrate that the agency retaliated for this refusal by denying the Groundbreaker and perhaps other work to Qwest.
By being prevented from telling his full story to the jury or from fully and properly cross-examining any rebuttal witnesses, Mr. Nacchio has been deprived of the ability to explaoin why - after he came out of the February meeting with a reasonable, good faith, expectation that Qwest would be receiving significant contracts from NSA in 2001 ... Qwest was denied significant work.
[ed note. James Payne, Qwest's government liason who was also at February 27, 2001 meeting, later spoke with government agents in 2006].
In the interview, Mr. Payne confirmed that, at the February 27, 2001 meeting, "[t]here was some discussion about [redacted]. Mr. Payne also stated: Subsequent to the meeting the customer came back and expressed disappointment at Qwest's decision. Payne realized at this time that "no" was not going to be enough fro them. Payne said they never actually said no and it went on for years. In meetings after meetings, they would bring it up. At one point, he suggested they just them, "no." Nacchio said it was a legal issue and that they could not do something their general counsel told them not to do. ... Nacchio projected that he might do it if they could find a way to do it legally.
There was a feeling also, that the NSA acted as agents for other government agencies and if Qwest frustrated the NSA, they would also frustrate other agencies.
The Groundbreaker contract, reportedly worth $2 - $5 billion dollars, outsources the NSA's IT management, but at least one lawsuit charges the project was cover for a domestic spying program.
Notably, after the USA Today story ran , Nacchio's lawyer Herbert Stern, who argued his case before trial, released this statement:
In light of pending litigation, I have been reluctant to issue any public statements. However, because of apparent confusion concerning Joe Nacchio and his role in refusing to make private telephone records of Qwest customers available to the NSA immediately following the Patriot Act, and in order to negate misguided attempts to relate Mr. Nacchio's conduct to present litigation, the following are the facts.
In the Fall of 2001, at a time when there was no investigation of Qwest or Mr. Nacchio by the Department of Justice or the Securities and Exchange Commission, and while Mr. Nacchio was Chairman and CEO of Qwest and was serving pursuant to the President's appointment as the Chairman of the National Security Telecommunications Advisory Committee, Qwest was approached to permit the Government access to the private telephone records of Qwest customers.
Mr. Nacchio made inquiry as to whether a warrant or other legal process had been secured in support of that request. When he learned that no such authority had been granted and that there was a disinclination on the part of the authorities to use any legal process, including the Special Court which had been established to handle such matters, Mr. Nacchio concluded that these requests violated the privacy requirements of the Telecommunications Act.
Accordingly, Mr. Nacchio issued instructions to refuse to comply with these requests. These requests continued throughout Mr. Nacchio's tenure and until his departure in June of 2002.
Note that Stern says a request was made in the Fall of 2001. Stern does not say "first approached" in the statement, though that clearly seems to be the implication. But it's not what the four corners of Stern's statement says. And finally, the redactions in the documents make it impossible to say what the February 21, 2001 requests from the NSA were. It could have been a request from NSA to do some other eavesdropping thing that Nacchio felt uncomfortable with, but I'm very doubtful.
source: Rocky Mountain News.com
Documents: Qwest was targeted
'Classified info' was not allowed at ex-CEO's trial
By Sara Burnett And Jeff Smith, Rocky Mountain News
October 11, 2007
The National Security Agency and other government agencies retaliated against Qwest because the Denver telco refused to go along with a phone spying program, documents released Wednesday suggest.
The documents indicate that likely would have been at the heart of former CEO Joe Nacchio's so-called "classified information" defense at his insider trading trial, had he been allowed to present it.
The secret contracts - worth hundreds of millions of dollars - made Nacchio optimistic about Qwest's future, even as his staff was warning him the company might not make its numbers, Nacchio's defense attorneys have maintained. But Nacchio didn't present that argument at trial.
The documents suggest U.S. District Judge Edward Nottingham refused to allow Nacchio to present the argument about retaliation. Nottingham also said Nacchio would have to take the stand to raise the classified defense.
Prosecutors have said they were prepared to poke holes in Nacchio's classified defense.
Nacchio was convicted last spring on 19 counts of insider trading for $52 million of stock sales in April and May 2001, and sentenced to six years in prison. He's free pending appeal.
The partially redacted documents were filed under seal before, during and after Nacchio's trial. They were released Wednesday.
Nacchio planned to demonstrate at trial that he had a meeting on Feb. 27, 2001, at NSA headquarters at Fort Meade, Md., to discuss a $100 million project. According to the documents, another topic also was discussed at that meeting, one with which Nacchio refused to comply.
The topic itself is redacted each time it appears in the hundreds of pages of documents, but there is mention of Nacchio believing the request was both inappropriate and illegal, and repeatedly refusing to go along with it.
The NSA contract was awarded in July 2001 to companies other than Qwest.
USA Today reported in May 2006 that Qwest, unlike AT&T and Verizon, balked at helping the NSA track phone calling patterns that may have indicated terrorist organizational activities. Nacchio's attorney, Herbert Stern, confirmed that Nacchio refused to turn over customer telephone records because he didn't think the NSA program had legal standing.
In the documents, Nacchio also asserts Qwest was in line to build a $2 billion private government network called GovNet and do other government business, including a network between the U.S. and South America.
The documents maintain that Nacchio met with top government officials, including President Bush, Vice President Dick Cheney and then-National Security Adviser Condoleeza Rice in 2000 and early 2001 to discuss how to protect the government's communications network.
They portray U.S. government officials, even before the Sept. 11 terrorist attacks, worried about a "Pearl Harbor" type of attack on the Internet. As early as 1997, a three-star general talked to Nacchio about using Qwest's new fiber-optic network for government purposes, according to the defense.
One key meeting with a government official was held at Qwest founder Phil Anschutz's ranch near Greeley, with former Chief Financial Officer Robin Szeliga prevented from attending presumably because she lacked security clearance.
Nacchio was on a Bush-appointed national security telecommunications advisory panel. In March 2001, then-counter-terrorism adviser Richard Clarke asked the panel if it would be possible to build a private network for the government to protect it from cyberwarfare.
Nacchio piped up: "I already built this network twice" for other government agencies. The defense asserts Nacchio believed Qwest would be asked to build the network and that it could do so in six months.
But the contract didn't materialize.
Looking ahead
DATES SET
Government's response to Nacchio's appeal brief is due Nov. 9. Nacchio could choose to file a reply to the government's brief by Nov. 20. Oral arguments at the 10th Circuit Court of Appeals are scheduled for Dec. 18 in Denver. In the meantime, Nacchio is free pending appeal.
APPELLATE COURT OPTIONS
• Uphold conviction (Nacchio could appeal to Supreme Court)
• Uphold conviction, reduce six-year sentence. (Nacchio could appeal to Supreme Court).
• Overturn conviction because evidence was insufficient to convict
• Order new trial based on errors made by U.S. District Judge Edward Nottingham.
EXCERPTS FROM NACCHIO'S APPELLATE BRIEF
• "The indictment, trial and conviction of Joseph P. Nacchio took place in an atmosphere of prejudgment and vitriol."
• "Many shareholders lost paper fortunes, employees lost jobs as the company downsized, and all demanded someone to blame."
• "After years of investigation, prosecutors apparently concluded that they could not prove any crime based on the accounting restatement, and settled on insider trading."
• "This is an unprecedented prosecution. The extraordinary charges here are based on the claim that Nacchio knew, eight months or more in advance, that Qwest might not make its year-end 2001 financial projections."
• "The prosecution yoked an unprecedented theory to plainly insufficient facts, and hoped, in a bitter and vindictive atmosphere, that it would be enough to win a conviction from a Denver jury. It was."
By Ryan Singel October 11, 2007 | 6:20:59 PMCategories: NSA
Did the NSA's massive call records database program pre-date the terrorist attacks of 9/11?
That startling allegation is in court documents released this week which show that former Qwest CEO Joseph Nacchio -- the head of the only company known to have turned down the NSA's requests for Americans' phone records -- tried, unsuccessfully, to argue just that in his defense against insider trading charges.
Nacchio was sentenced to 6 years in prison in 2007 after being found guilty of illegally selling shares based on insider information that the company's fortunes were declining. Nacchio unsuccessfully attempted to defend himself by arguing that he actually expected Qwest's 2001 earnings to be higher because of secret NSA contracts, which, he contends, were denied by the NSA after he declined in a February 27, 2001 meeting to give the NSA customer calling records, court documents released this week show.
AT&T, Verizon and Bellsouth all agreed to turn over call records to an NSA database, according to reporting in the USA Today in 2006. At that time, Nacchio's lawyer publicly stated that Nacchio declined to participate until served with a proper legal order.
The government has never confirmed or denied the existence of the program, but is trying to win legal immunity for telecoms being sued for their alleged participation in the call records program and the government's warrantless wiretapping of Americans. Turning over customer records to anyone, including the government, without proper legal orders violates federal privacy laws.
Nacchio's attempt to depose witnesses and present the classified defense was declined by Colorado federal district court judge Edward Nottingham, a decision that is playing a role in Nacchio's pending appeal to the 10th Circuit Appeals court.
The allegation is peppered throughout the highly redacted documents released by the lower court today, but are most clear in the introduction to this filing (.pdf) from April 2007.
Defendant Joseph P. Nacchio ... respectfully renews his objection to the Court's rulings excluding testimony surrounding his February 27, 2001 meeting at Ft. Meade with representatives from the National Security Agency (NSA) as violative of his constitutional right to mount a defense. Although Mr. Nacchio is allowed to tell the jury that he and James Payne went into that meeting expecting to talk about the "Groundbreaker" project and came out of the meeting with optimism about the prospect for 2001 revenue from NSA, the Court has prohibited Mr. Nacchio from eliciting testimony regarding what also occurred at that meeting. [REDACTED] The Court has also refused to allow Mr. Nacchio to demonstrate that the agency retaliated for this refusal by denying the Groundbreaker and perhaps other work to Qwest.
By being prevented from telling his full story to the jury or from fully and properly cross-examining any rebuttal witnesses, Mr. Nacchio has been deprived of the ability to explaoin why - after he came out of the February meeting with a reasonable, good faith, expectation that Qwest would be receiving significant contracts from NSA in 2001 ... Qwest was denied significant work.
[ed note. James Payne, Qwest's government liason who was also at February 27, 2001 meeting, later spoke with government agents in 2006].
In the interview, Mr. Payne confirmed that, at the February 27, 2001 meeting, "[t]here was some discussion about [redacted]. Mr. Payne also stated: Subsequent to the meeting the customer came back and expressed disappointment at Qwest's decision. Payne realized at this time that "no" was not going to be enough fro them. Payne said they never actually said no and it went on for years. In meetings after meetings, they would bring it up. At one point, he suggested they just them, "no." Nacchio said it was a legal issue and that they could not do something their general counsel told them not to do. ... Nacchio projected that he might do it if they could find a way to do it legally.
There was a feeling also, that the NSA acted as agents for other government agencies and if Qwest frustrated the NSA, they would also frustrate other agencies.
The Groundbreaker contract, reportedly worth $2 - $5 billion dollars, outsources the NSA's IT management, but at least one lawsuit charges the project was cover for a domestic spying program.
Notably, after the USA Today story ran , Nacchio's lawyer Herbert Stern, who argued his case before trial, released this statement:
In light of pending litigation, I have been reluctant to issue any public statements. However, because of apparent confusion concerning Joe Nacchio and his role in refusing to make private telephone records of Qwest customers available to the NSA immediately following the Patriot Act, and in order to negate misguided attempts to relate Mr. Nacchio's conduct to present litigation, the following are the facts.
In the Fall of 2001, at a time when there was no investigation of Qwest or Mr. Nacchio by the Department of Justice or the Securities and Exchange Commission, and while Mr. Nacchio was Chairman and CEO of Qwest and was serving pursuant to the President's appointment as the Chairman of the National Security Telecommunications Advisory Committee, Qwest was approached to permit the Government access to the private telephone records of Qwest customers.
Mr. Nacchio made inquiry as to whether a warrant or other legal process had been secured in support of that request. When he learned that no such authority had been granted and that there was a disinclination on the part of the authorities to use any legal process, including the Special Court which had been established to handle such matters, Mr. Nacchio concluded that these requests violated the privacy requirements of the Telecommunications Act.
Accordingly, Mr. Nacchio issued instructions to refuse to comply with these requests. These requests continued throughout Mr. Nacchio's tenure and until his departure in June of 2002.
Note that Stern says a request was made in the Fall of 2001. Stern does not say "first approached" in the statement, though that clearly seems to be the implication. But it's not what the four corners of Stern's statement says. And finally, the redactions in the documents make it impossible to say what the February 21, 2001 requests from the NSA were. It could have been a request from NSA to do some other eavesdropping thing that Nacchio felt uncomfortable with, but I'm very doubtful.
__________________________________________________
source: Rocky Mountain News.com
Documents: Qwest was targeted
'Classified info' was not allowed at ex-CEO's trial
By Sara Burnett And Jeff Smith, Rocky Mountain News
October 11, 2007
The National Security Agency and other government agencies retaliated against Qwest because the Denver telco refused to go along with a phone spying program, documents released Wednesday suggest.
The documents indicate that likely would have been at the heart of former CEO Joe Nacchio's so-called "classified information" defense at his insider trading trial, had he been allowed to present it.
The secret contracts - worth hundreds of millions of dollars - made Nacchio optimistic about Qwest's future, even as his staff was warning him the company might not make its numbers, Nacchio's defense attorneys have maintained. But Nacchio didn't present that argument at trial.
The documents suggest U.S. District Judge Edward Nottingham refused to allow Nacchio to present the argument about retaliation. Nottingham also said Nacchio would have to take the stand to raise the classified defense.
Prosecutors have said they were prepared to poke holes in Nacchio's classified defense.
Nacchio was convicted last spring on 19 counts of insider trading for $52 million of stock sales in April and May 2001, and sentenced to six years in prison. He's free pending appeal.
The partially redacted documents were filed under seal before, during and after Nacchio's trial. They were released Wednesday.
Nacchio planned to demonstrate at trial that he had a meeting on Feb. 27, 2001, at NSA headquarters at Fort Meade, Md., to discuss a $100 million project. According to the documents, another topic also was discussed at that meeting, one with which Nacchio refused to comply.
The topic itself is redacted each time it appears in the hundreds of pages of documents, but there is mention of Nacchio believing the request was both inappropriate and illegal, and repeatedly refusing to go along with it.
The NSA contract was awarded in July 2001 to companies other than Qwest.
USA Today reported in May 2006 that Qwest, unlike AT&T and Verizon, balked at helping the NSA track phone calling patterns that may have indicated terrorist organizational activities. Nacchio's attorney, Herbert Stern, confirmed that Nacchio refused to turn over customer telephone records because he didn't think the NSA program had legal standing.
In the documents, Nacchio also asserts Qwest was in line to build a $2 billion private government network called GovNet and do other government business, including a network between the U.S. and South America.
The documents maintain that Nacchio met with top government officials, including President Bush, Vice President Dick Cheney and then-National Security Adviser Condoleeza Rice in 2000 and early 2001 to discuss how to protect the government's communications network.
They portray U.S. government officials, even before the Sept. 11 terrorist attacks, worried about a "Pearl Harbor" type of attack on the Internet. As early as 1997, a three-star general talked to Nacchio about using Qwest's new fiber-optic network for government purposes, according to the defense.
One key meeting with a government official was held at Qwest founder Phil Anschutz's ranch near Greeley, with former Chief Financial Officer Robin Szeliga prevented from attending presumably because she lacked security clearance.
Nacchio was on a Bush-appointed national security telecommunications advisory panel. In March 2001, then-counter-terrorism adviser Richard Clarke asked the panel if it would be possible to build a private network for the government to protect it from cyberwarfare.
Nacchio piped up: "I already built this network twice" for other government agencies. The defense asserts Nacchio believed Qwest would be asked to build the network and that it could do so in six months.
But the contract didn't materialize.
Looking ahead
DATES SET
Government's response to Nacchio's appeal brief is due Nov. 9. Nacchio could choose to file a reply to the government's brief by Nov. 20. Oral arguments at the 10th Circuit Court of Appeals are scheduled for Dec. 18 in Denver. In the meantime, Nacchio is free pending appeal.
APPELLATE COURT OPTIONS
• Uphold conviction (Nacchio could appeal to Supreme Court)
• Uphold conviction, reduce six-year sentence. (Nacchio could appeal to Supreme Court).
• Overturn conviction because evidence was insufficient to convict
• Order new trial based on errors made by U.S. District Judge Edward Nottingham.
EXCERPTS FROM NACCHIO'S APPELLATE BRIEF
• "The indictment, trial and conviction of Joseph P. Nacchio took place in an atmosphere of prejudgment and vitriol."
• "Many shareholders lost paper fortunes, employees lost jobs as the company downsized, and all demanded someone to blame."
• "After years of investigation, prosecutors apparently concluded that they could not prove any crime based on the accounting restatement, and settled on insider trading."
• "This is an unprecedented prosecution. The extraordinary charges here are based on the claim that Nacchio knew, eight months or more in advance, that Qwest might not make its year-end 2001 financial projections."
• "The prosecution yoked an unprecedented theory to plainly insufficient facts, and hoped, in a bitter and vindictive atmosphere, that it would be enough to win a conviction from a Denver jury. It was."
