Oct. 10 (Bloomberg) -- Joseph Nacchio, the convicted former Qwest Communications International Inc. chief executive, asked a federal appeals court for a new trial, claiming he was found guilty of insider trading based on insufficient evidence.

Jurors in April convicted Nacchio, 58, of selling $52 million in shares of Qwest, the fourth-largest U.S. phone company, based on private warnings the company would miss revenue targets in 2001. Nacchio, who was sentenced to six years in prison, claimed prosecutors failed to prove he had important information, or that he knew Qwest's stock would collapse.

``There is insufficient evidence that Nacchio knew he had any material information that had to be disclosed prior to trading,'' Nacchio's attorneys wrote in a motion filed yesterday. ``All of the direct evidence (including his own trading decisions) shows that Nacchio was bullish and believed Qwest stock was undervalued.''

The U.S. Appeals Court in Denver, where Qwest is based, has allowed Nacchio to remain free on $2 million bail and will hear his lawyers' oral arguments Dec. 18. Nacchio still faces a civil lawsuit by the U.S. Securities and Exchange Commission, which claims he orchestrated an accounting scandal that nearly bankrupted Denver-based Qwest.

Bryan Sierra, a spokesman for the U.S. Department of Justice, said he had no comment on the Nacchio filing. He said prosecutors will respond later in court papers.

Nacchio, who served as CEO from 1997 to 2002, presided over a $100 billion drop in Qwest's market value.

Supreme Court

Nacchio's legal team is led by appellate lawyer Maureen Mahoney of Latham & Watkins, who won three of four cases she argued over the past year before the U.S. Supreme Court.

In this case, she argued that Nacchio's subordinates warned him about the risk of Qwest failing to meet internal budget estimates, not its lower public revenue projections. She said District Judge Edward Nottingham, who presided over the trial, failed to instruct jurors about SEC rules that were ``relevant to a fair understanding of the defendant's state of mind.''

Mahoney wrote in court papers that the trial judge ``left the jury on its own to decide what information was `important' to investors and refused to instruct the jury to apply the specific rules governing the materiality of information related to forward-looking information.''

Nottingham also improperly excluded testimony by Nacchio's expert on the materiality of financial information, she said.

Classified Information

The motion referred to a sealed supplement in which Nacchio claimed that Nottingham made errors under the Classified Information Procedures Act. The former CEO claimed before trial that he knew about Qwest's possible receipt of classified government contracts. He used none of that information at trial.

Mahoney also claimed that the trial judge miscalculated Nacchio's gains from the trades as $52 million, meaning his possible sentence under advisory federal sentencing guidelines was 70 to 87 months. Mahoney said the gain was only $1.8 million, meaning his range should have been 41 to 51 months. She said the judge failed to attribute the market appreciation of stock options granted to Nacchio.

``The vast majority of the amount calculated by the court reflects years of legitimate price appreciation in Qwest stock since the options were granted, and should not have played a role in determining Nacchio's relative culpability,'' she wrote.

The case is U.S. v. Nacchio, 05-cr-545, U.S. District Court, District of Colorado (Denver).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

Last Updated: October 10, 2007 17:00 EDT