Thursday, March 22, 2007

Another Reason to Subscribe to the WSJ

UPDATE & Commentary II: The government's first witness, Mr. Wolfe (another Qwest executive) also sold stock during the time period Nacchio did. He testified: "I had a crisis of conscience. I knew it was wrong, . . . I shouldn't have done it before. I quit." Ouch.

But on cross-examination, I think the defense kneecapped the witness, and the government, by getting to their first guy.

Mr. Wolfe admitted on cross that he never consulted a lawyer during the period he sold the stocks, and only consulted one when he became a target three years later. So... how did he "kn[o]w it was wrong"? Don't you think you'd want to check if you a) had just unloaded a lot of stock in a way you thought "was wrong" and b) to see if you were actually wrong and could keep unloading stock? This whole line of "I knew it was wrong" sounds completely fabricated to me.

Mr. Wolfe's sterling credibility further demonstrated:

Q: "When the winds started blowing the other way, you cooperated, right?"

A: "I was concerned I'd be prosecuted."

Mr. Wolfe received immunity for his sales.

I'm sorry if my natural inclination for the criminal defendant is coming on extra-strong here, I just think that this prosecution, plus what we know about the U.S. Attorney debacles, forces me to connect the dots with the fact that Nacchio/Qwest was the only telecom to oppose the NSA wiretapping...

Today's full coverage here.


The trial of Joseph Nacchio, former CEO of Qwest, is off to a start in Denver before Judge "the Sheriff" Nottingham (real nickname). Nacchio's lead counsel is Herb Stern (himself a former federal district judge). Intervenors in the case include four agencies so classified their names could not be revealed (?!). The criminal charge is insider trading. The Journal's coverage so far has been riveting and comprehensive - I highly recommend it.

Today's coverage: here.

UPDATE: I forgot to add one of the many kickers to the story. The defense will be calling Richard Clarke, of intelligence/counterterrorism fame post-9/11. Call it a hunch, I think he'll be willing to testify. Unlike these guys.


Blogger McWho said...

Clarke's books are bad. Just because you have alot of ideas that aren't backed up enough by fact to publish in a scholarly journal doesn't mean they are an entertaining bedside read as fiction.

Course maybe to lots of people they are, I'm sure he is making mad bank off of the terrorism fears. His last book includes robot marines, a rogue general destroying the internet, and the rugged yet heroic NYPD officer that saves the world.

3/21/2007 12:46 PM  
Anonymous Anonymous said...

This McWho guy CANNOT inherit this blog when Armen graduates.

3/21/2007 2:48 PM  
Anonymous Anonymous said...

Indeed. I for one am a strong supporter of robot marines and destroying the internet.

3/21/2007 3:08 PM  
Anonymous Anonymous said...

However, if you have a lot of ideas not backed up by facts, you can become president.

3/21/2007 6:54 PM  
Blogger McWho said...

I personally think most of the anonymous people would do better to inherit than I.

Just not 2:48.

3/21/2007 11:46 PM  
Blogger PG said...

Why the "?!" ? Dragging in top secret national security matters is becoming a standard ploy for high profile defendants who, when the government refuses to give up info, then can whine that they're not being allowed to put on their defense.

I just wonder what you can name a federal agency when you're never going to disclose the name (or more importantly in DC, the acronym) to the outside world. Defense Intelligence Countering KGB? We Get the Best Bunker? Yo Mama's Agency? I was told by a friend at the State Department once, when we were driving through Northern Virginia and I was marveling at some of the high rise office buildings, that many of the ones with tech companies' names on them actually house federal agencies.

And apparently being the only commenter as dorky as Fletcher, I agree that the WSJ coverage of the trial qualifies as riveting. I started reading an article about it last week sitting in a hotel lobby, and almost forgot to catch the shuttle for my flight.

3/22/2007 12:46 AM  
Anonymous Anonymous said...

(sorry this is waaaay too long for a comment, but I thought it was time to drag out this old chestnut)

Recognition of Pro-Formalist Movement Gets WorldCom, Andersen Off Hook

Washington, D.C. (July 19th) -- In a surprise decision that exonerates dozens of major companies, the U.S. Supreme Court today ruled that corporate earnings statements should be protected as works of art, as they "create something from nothing."

"One plus one is two. That is math. That is science. But as we have seen, earnings and revenues are abstract and original concepts, ideas not bound by physical constraints or coarse realities, and must therefore be considered art," the Court wrote in its 7-2 decision.

The impact of the ruling was widespread. Investigations into hundreds of firms were canceled, as collectors began snatching up original balance sheets, audits, and P&L statements from WorldCom, Enron, Global Crossing and other Wall Street innovators. Meanwhile, auditing firms such as Arthur Andersen (now Art by Andersen) were reclassified as art critics, whose opinions are no longer liable.

"Before we had to go in and decide, 'Is it right, or is it wrong?'" said KPMG spokesman Dan Fischer. "Now we must only decide, 'Is it art?'"

In Congress, all further hearings into irregularities were abandoned in favor of an abstract accounting lecture given by Scott Sullivan, former Chief Financial Artist of WorldCom, which had been charged with fraud for improperly accounting for $3.85 billion.

"Art should reflect life, so what I was really trying to accomplish with this third quarter report was simply to acknowledge that life is, after all, a mere illusion," said Sullivan, explaining his acclaimed work, "10K for the Period Ending 9/30/01."

U.S. Rep. Billy Tauzin of Louisiana, however, remained skeptical, still suggesting that all this "smacked of sophistry." And while the Court was impressed with his use of a word rarely encountered in Cajun Country, they remained unmoved.

"Yes, well, a man (like Tauzin) with a concretized view of the world may only be able to see numbers that 'don't add up,'" added a haughty Sullivan. "But someone whose perceptions are not always chained to reality - a stock analyst, say - may see numbers that, like the human spirit, aspire to be greater than they are."

Several Sullivan pieces are now scheduled to be included as part of a new groundbreaking show at New York's Museum of Modern Art entitled, "Shadows & Spreadsheets: The Origins of Pro-Formalism." Robert Weidlin, an SEC investigator and avid collector, is heavily involved in putting together the Enron exhibit, which will take up an entire wing of the museum.

"You look at these works, and you say 'Is this a profit, or a loss? Is this firm a subsidiary, or a holding company?'" said Walden. "I have stood in front of this one balance sheet for hours, and each moment I come away with something different."

Like other patrons, Weidlin said he was unsure whether the public would be impressed or outraged by the forthcoming exhibition, a reaction that pleased Andrew Fastow, the former Enron CFA who is a leading proponent of the Trompe de L'Shareholder style.

"An artist should not be afraid to be shocking," said Fastow. "As did the Modernists, the Pro-Formalists fearlessly depart from tradition and embrace the use of innovative forms of expression. Like, say, 'Special Purpose Entities' and 'Pooling of Interests.'"

Sullivan, meanwhile, said he was influenced by the Flemish Masters, particularly Lernout & Hauspie, the Belgian speech-recognition software company that collapsed last year after an audit discovered the firm had cooked its books in 1998, 1999, and 2000. "Lernout & Hauspie simply invented sales figures, just willed them out of thin air and onto the paper," he said. "Me? I must live with a spreadsheet a long time before I begin to work it.

You must be patient and wait until the numbers reveal themselves to you." And what about the reaction to his work? "I realize people are angry, people are hurt. But I cannot concern myself with that," he said. "As with all true artists, I don't expect to be understood during my lifetime."

(The MOMA exhibit will run from August 1 through Sept. 3. Admission is $88, excluding a one-time write down of deferred stock compensation and other costs associated with the carrying value of inventory.

Copyright © 2002, SatireWire.

3/22/2007 11:57 AM  
Anonymous Anonymous said...

tom, can you please elaborate on your "natural inclination for the criminal defendant?"

3/22/2007 12:12 PM  
Anonymous Anonymous said...

I would read the WSJ if it weren't for the lunatic editorial page with its lunatic (and not very bright, quite frankly)ideologues...

3/22/2007 4:16 PM  

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