Oct. 5 (Bloomberg) -- The U.S. Supreme Court rejected an appeal by Joseph Nacchio, the former Qwest Communications International Inc. chief executive officer convicted of selling $52 million in company stock based on inside information.

The justices, without comment, let stand a federal appeals court decision that upheld Nacchio’s conviction. His lawyers contended that Nacchio didn’t withhold any material information from the public about the company’s condition and that an expert witness was improperly barred from testifying at his trial.

“I am deeply disappointed by the court’s decision because I am convinced that he is innocent and did not receive a fair trial,” Nacchio’s lead Supreme Court lawyer, Maureen Mahoney, said in an e-mail.

Nacchio began serving what initially was a six-year sentence in April. An appeals court later ordered a trial judge to reconsider the prison term, saying the original sentence was based on a miscalculation of how much Nacchio gained from his illicit conduct.

Nacchio, 60, separately is seeking a new trial, arguing before a federal district judge in Denver that new evidence shows prosecutors mischaracterized the testimony of the company’s former chief financial officer.

Prosecutors said Nacchio should have disclosed in 2001 that Qwest’s recurring revenue was falling short and that the company was relying too heavily on the shrinking market for one-time sales of its network capacity. He was accused of accelerating his stock sales upon learning in April 2001 that Qwest missed its first-quarter forecasts for recurring revenue.

Not Enough Certainty

Nacchio contended in his appeal that the internal forecasts he received didn’t provide enough certainty to warrant disclosing them to investors.

“Companies cannot bare their internal debates and forecasting process to the public and to competitors, and investors would not be well served if they tried,” the appeal argued.

The Obama administration, represented by Solicitor General Elena Kagan, argued that Nacchio had information showing “a high likelihood, if not certainty, that Qwest would fail to meet its public guidance.”

The appeal also contended that the trial judge improperly excluded “the heart of Nacchio’s defense” - the expert testimony of Daniel Fischel, a securities law specialist and former dean of the University of Chicago Law School.

Fischel was planning on rebutting the government’s contention that the undisclosed information, once it was released to the public, was responsible for a drop in the company’s stock price.

Nacchio sold 1,255,000 shares of Denver-based Qwest between April 26 and May 15, 2001, at prices between $37 and $42. Shares fell below $12 by November 2001.

The case is Nacchio v. United States, 08-1172.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: October 5, 2009 10:54 EDT