The former chief executive officer of Qwest Communications on Wednesday sued the lawyers who represented him in his insider-trading case, claiming they "grossly overbilled" him and sought payment for staff breakfasts, underwear and in-room movies.
The malpractice lawsuit filed by Joseph Nacchio in state Superior Court in Newark accuses Herbert Stern and the Roseland-based law firm of Stern & Kilcullen of negligence and seeks more than $25 million in compensatory and punitive damages, as well as attorney's fees.
A message left for Stern at his law office Wednesday was not returned.
Nacchio, 61, is serving a 70-month prison sentence at a federal prison in Pennsylvania after being convicted in 2007 of selling $52 million in stock in Denver-based Qwest Communications International Inc. based on inside information.
After an appeal of his original sentence, he also was ordered to pay a $19 million fine and forfeit almost $45 million.
"This is a really sad case," said Bruce Nagel, the Roseland lawyer handling Nacchio's lawsuit. "Bad lawyering resulted in a long jail sentence and $70 million in fines, and Nacchio was grossly overbilled in the process. It is time to deal with this unnecessary injustice.
The suit accuses Stern of negligence in his handling of Nacchio's trial, including the "blatant failure to comply with basic litigation procedures," practices that Nacchio says led to the trial judge barring the defense's lone expert witness.
It also alleges that Stern & Kilcullen improperly used money it held in trust to pay itself unreasonable and excessive fees.
The suit claims the firm sought payment for tens of thousands of dollars in breakfasts, underwear for lawyers and in-room movies during the trial in federal court in Denver.
Nacchio had indicated he might appeal again to lower the fine amount he faced, but he agreed last month to drop that appeal as part of a settlement of a civil complaint the Securities and Exchange Commission brought against him.
The SEC had alleged Nacchio and others at Qwest misled investors when it reported on its financial performance between 1999 and 2002. The SEC complaint is still pending against other former Qwest executives and employees.
Nacchio resigned from Qwest in 2002.
Associated Press writer Catherine Tsai in Denver contributed to this report.