A federal appeals court reinstated the insider trading conviction of former Qwest CEO Joe Nacchio on Wednesday and said he could be ordered to begin serving a 6-year prison sentence.
A three-judge panel of the 10th U.S. Circuit Court of Appeals had overturned the conviction last year, ruling that the trial judge improperly barred testimony from a defense witness.
But on a 5-4 vote, the full 10th Circuit said Wednesday the trial court was "well within its discretion" to keep the witness off the stand.
The four dissenting judges disagreed strongly. "We have nagging doubts about the district judge's sense of fairness toward this defendant. If the decision here was not an abuse of discretion, we wonder what one would look like," they wrote.
Nacchio's attorney, Maureen Mahoney, didn't immediately return a call.
Acting U.S. Attorney David Gaouette said the ruling means "justice has been served."
Former U.S. Attorney Troy Eid, who helped oversee the government's case against Nacchio, said he never doubted the conviction would be reinstated.
"It's exactly as it should have been from the get-go," he said.
A jury convicted Nacchio in 2007 of 19 counts of insider trading while acquitting him on 23 counts of the same charge.
Federal prosecutors alleged Nacchio sold $52 million worth of stock at a time when he knew Qwest Communications International q was at risk while other investors did not.
He was sentenced to six years in prison, but the sentence was stayed during the appeal. The full appeals court lifted the stay Wednesday and revoked Nacchio's bond.
Nacchio's lawyers wanted the excluded witness, Daniel Fischel, an author and Northwestern University professor, to offer an explanation for the fall in Qwest stock and to discuss whether Nacchio's trading pattern was suspicious.
The trial judge, U.S. District Judge Edward Nottingham, barred Fischel's testimony over concerns about his methodology. Nottingham has since resigned amid unrelated complaints.
Two of the dissenting judges were on the three-judge panel that overturned Nacchio's conviction in March.
Peter Henning, a professor at Wayne State University in Detroit and an expert in white-collar crime cases, said he expects Nacchio to appeal.
"When you have that close of a split (the 5-4 vote), he will appeal this to the Supreme Court."
Nelson Phelps, executive director of the Association of US West Retirees, which also represents Qwest retirees, said most of his members welcome the latest ruling.
"So many of our people were hurt by his shenanigans and lost quite a bit of their retirement savings because they had so trusted the company," he said.
Phelps said he doubts Nacchio would win an appeal to the Supreme Court.
"In the end, all I think he's doing is putting off an eventual serving of time," he said.
Nacchio still faces a fraud lawsuit filed by Securities and Exchange Commission filed against him and other former Qwest executives. The SEC alleges they orchestrated a financial fraud that forced the telecommunications company to restate $2.2 billion of revenue.