Whistle Blower Summit: Nacchio & Scrushy fight the government…and lose

Joseph Nacchio and Richard Scrushy were both once CEOs of major corporations. They spoke out. The lesson learned: When the government wants to get you, it will get you


WASHINGTON, August 12, 2015 —  Joseph Nacchio and Richard Scrushy were both once CEOs of major corporations. They have also both served federal time for dubious crimes where evidence reportedly was manipulated so that even the best lawyers money could buy couldn’t stop an injustice.

Between them, they spent $75 million in defending themselves.

“I’m just a kid from Brooklyn,” Nacchio told an audience at the Whistle Blower Summit in Washington D.C. on July 29, 2015.

Nacchio is the former CEO of Qwest, once a rising regional telecommunications firm. He said he was first summoned in 1997 by a three star general to help the government serve on task forces on telecommunications.

The rights of whistleblowers vs. the Federal Government

In May 2001, the relationship changed. Nacchio said he was asked by one of the U.S. agencies for a plethora of customer data for mass data collection. Nacchio stressed that this request occurred prior to 9/11.

When Nacchio asked for their legal reasoning to invade the privacy of his clients, the government refused to respond.

“I had a fiduciary duty to protect my clients’ privacy,” Nacchio said, who also spoke at the National Press Club earlier the same day.

Nacchio refused the order, leading the government to end the partnership and cancel all contracts with him.

Several years later, Nacchio was charged with insider trading. The government accused him of selling his shares in Qwest, knowing the company would lose government contracts.

Naccio, who has also told his story to Maria Bartiromo, described a Kafka-like experience after he was charged. He was summoned into a secret court where he said the judge summarily ruled nearly all of his defense classified and disallowed Nacchio from presenting it at trial.

This included evidence that Nacchio began selling his stock before finding out the government cancelled the contracts.

On July 27, 2007, Naccio was convicted of insider trading and sentenced to six years in a federal prison.  He was released in September 2013.

Richard Scrushy is the founder and former CEO of Health South Corporation, a global health care company.

Scrushy said he was victimized by one of the most notorious political prosecutions of all time. He became a pawn, he told the audience, in a Republican plot to take down a popular southern Democratic governor, Don Siegelman.

In 2006, Scrushy was found not guilty in a trial where Siegelman was co-defendant of numerous corruption related charges, but he had no time to celebrate.

Within a year, Scrushy was indicted again in a secret indictment. At the center was a purported quid pro quo in which the government alleged that Scrushy paid off $500,000 in government debts for a seat on the Certificates of Need Review Board.

But Scrushy told the audience that not only could the government not produce any such check but that he had already served on the same board under three former governors. Ironically, he said he had requested to leave the board but was asked to stay on for another year in order to find a replacement.

The USA Freedom Act eroding America’s rights

As his trial unfolded, a paralegal turned U.S. Department of Justice whistleblower named Tamarah Grimes stepped forward with allegation of DOJ impropriety in the case.

Here’s part of a piece by Main Justice:

“The OSC (Office of Special Counsel) launched the investigation following complaints by Tamarah Grimes, a former paralegal in the office, who alleged officials in the office did not report improper jury communications, among other things.”

The attorney general’s office investigated itself and found the allegations without merit.

Worse yet, the federal judge, Don Ross, was part owner in an aviation company which received several hundred million dollars in federal government contracts during the trial. Ross was recently removed from the bench in disgrace.

Not only was the alleged corruption the subject of a piece on 60 Minutes during the trial but over one hundred former state attorney generals wrote letters to the justice department stating that even if the alleged actions were proven this would still not constitute a crime.

Scrushy was convicted nonetheless and spent about five years in federal prison. Siegelman, once considered a leading contender for president, won’t be released until 2017.

“As whistleblowers, we know the deck is stacked against us especially when we fight government corruption. We assume that we only win roughly 2% of whistleblower cases because we don’t have the financial wherewithal to effectively combat government systems. But we often wonder how much money does it actually take to mount a credible case against the government. How much money does justice costs? The revelations that Joe Nacchio and Richard Schrucy made during the Whistle Blower Summit for Civil & Human Rights are astounding. They spent $25 Million and $50 Million respectively on their defense against the federal/state government—and still lost.” Michael McCray, one of the organizers of the summit, told CDN.

McCray knows about consequences. He blew the whistle on about $40 million in misspent funds at the US Department of Agriculture in the mid 1990’s. He was not only terminated from working at the USDA, but has been blackballed from all government employment.

The message from Nacchio and Scrushy was that when the government wants to get you, it will get you.

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