Attorneys in the Joe Nacchio trial aren't talking about Qwest's restatement of financial results because it happened "for a lot of different reasons having nothing to do with this case," Judge Edward Nottingham said.

Nottingham made his decision in a private sidebar Tuesday that occurred after prosecutor Colleen Conry asked former Qwest Chief Financial Officer Robin Szeliga whether Qwest had restated its financials.

The Nacchio trial focuses on $101 million in stock sales Nacchio made between January and May 2001, and whether he knew Qwest was unable to make the aggressive growth targets it had announced to Wall Street.

Nacchio's defense attorneys have noted repeatedly at trial that Qwest hit its earnings targets for 17 consecutive quarters, including the first two quarters of 2001. The defense is arguing that Nacchio was right, and his underlings wrong, about Qwest's ability to make its numbers.

But if the jury were to consider the restated numbers, Qwest's record of meeting expectations would have been broken much earlier.

That was not in the government's plans. The indictment does not allege Qwest's accounting was fraudulent, a charge made by regulators at the Securities and Exchange Commission. Instead, the case is centered on disclosure, regardless of proper accounting.

Qwest announced a $2.5 billion restatement in October 2003 after new CEO Dick Notebaert and new accounting firm KPMG went back through the company's books. The restatement was for the years 2000 through 2002.

The restatement issue came up at trial after Nacchio defense attorney Herbert Stern asked Szeliga whether she recalled that Qwest had made the numbers Wall Street expected for 17 consecutive quarters.

That prompted Conry to ask Szeliga about the restatement on what's called redirect. Stern immediately objected, and the private session began.

"I think the jury is left with a misimpression," Conry argued to Nottingham, according to a transcript. "I think he opened the door for two questions, and that is, were they restated, and were those restated numbers less than the original guidance."

But Stern convinced Nottingham that "If we get into this area, I believe we will be in this trial forever."

He added: "And the government said in the opening, this is not about numbers, this is about special information."

Stern also made the case the restatement was done well after 2001, with different management and a different auditor.

Nottingham said, "I'm a little bit torn, because, frankly, I think that to say that Qwest made the numbers is a little bit misleading.

"But I agree with Mr. Stern, I think that - if we get into these accounting issues and how they were making the numbers and that kind of issue, we are going to be here a long time," Nottingham said. "The problem is that they were restated with a different accounting firm, with different management at a far later time."

The matter may be reopened if the defense introduces it, intentionally or not. Later Tuesday, Jeffrey Speiser, one of Nacchio's attorneys, asked witness Gregory Casey, the executive in charge of selling network capacity, whether the company's deals were "all properly accounted for."

"You want to think about that question?" Nottingham asked Speiser, as Stern rose. "Talk to Mr. Stern about it. See if you guys can get your strategies together."

milstead@RockyMountainNews.com or 303-954-2648