Joseph Nacchio, former CEO of Qwest
Like many executives who emerged in the Internet dot-com boom of the late 1990s, Joseph Nacchio capitalized on the idea that if you build a very high speed optical network, customers will quickly come.
What Nacchio and a number of other fiber-rich providers soon learned at the time was that there was more wholesale fiber available than was actually needed.
Nacchio came to Qwest, an aggressive long-distance fiber service provider formed from the Southern Pacific Railroad's telecom venture, Southern Pacific Telecommunications Company. That company was laying fiber for MCI along railway lines and for its own future use.
Under Nacchio's leadership, Qwest made one of the most ambitious deals of its existence when he crafted a deal to acquire the former US West, a regional Bell company created from the breakup of the legacy AT&T (NYSE: T) serving the northwestern U.S. territory.
But the US West deal was the beginning of Nacchio's downfall.
US West did not go willingly, as Qwest conducted a hostile takeover. Further, not long after the companies merged, Qwest had to pay $1.5 million to the FCC for slamming, a practice where service providers change a customer's long distance carrier without telling them.
However, the cracks in the armor really started to show in May 2001 when Qwest's stock began to decline from its all time high of $38. By August 2002, the stock fell below $2 not long after Nacchio had already conveniently resigned from the company in June of that year.
Later, Nacchio and six of his management colleagues were sued by the U.S. Securities and Exchange Commission, which accused them of "massive" $3 billion financial fraud between 1999 and 2002. In their suit, they said that he sold $52 million in stock in 2001 despite his knowledge that the company wasn't performing financially well.
Finally in 2007, he was convicted of 19 counts of insider trading and was sentenced to serve six years in federal prison.
After a failed attempt in February 2009 to appeal his conviction, Nacchio was ordered to immediately begin serving his six-year prison sentence at a federal prison at Schuylkill County, Pa.
Additional attempts to reduce his sentence have also failed. In June 2010, U.S. District Judge Marcia Krieger in Denver ruled that Nacchio must serve 70 months, pay a $19 million fine, and forfeit $44.6 million.