Former Qwest Communications (Q) chief executive Joe Nacchio, on trial for insider trading, attempted to hide $90 million in assets by transferring stock into accounts held solely by his wife, according to a prosecution motion made public Wednesday.

In the motion filed late Tuesday outside the jury's presence, prosecutor Kevin Traskas asked for permission to introduce evidence about the February 2002 transfer to counter the defense's contention that Nacchio did not sell personal shares of Qwest Communications from 2001 through 2002.

Defense attorney Herbert Stern filed a motion Wednesday stating that the asset transfer occurred after the time period in which Nacchio is accused of insider trading so it was irrelevant to this trial.

Prosecutor Cliff Stricklin told U.S. District Judge Edward Nottingham that he planned to call a financial analyst Thursday to testify about the asset transfers, and the judge agreed to issue a ruling before then.

Nacchio has acknowledged exercising stock options in the first five months of 2001 to earn $101 million, which are the transactions at issue in the trial.

Prosecutors say Nacchio sold the stock while knowing Qwest faced financial troubles that could affect its share price. They have pointed to the company's practice of using one-time sales to meet financial targets without informing the public. Federal regulators said later that practice was improper.

The defense says Nacchio had to exercise stock options under terms of his contract but was optimistic about the company's future because he anticipated lucrative contracts with clandestine government agencies.

During Wednesday's testimony, former Qwest controller Mark Schumacher said he decided against selling stock in the spring of 2001 because he was concerned that Qwest was withholding from the public information about how much it was relying on one-time sales to meet its financial targets.

"I just wasn't comfortable selling stock or my options in that kind of situation," he said.

One-time sales of capacity on Qwest's fiber optic network accounted for 8.45 percent of total revenue of $5.05 billion in the first quarter of 2001, or 39 percent of revenue growth from the year-ago quarter, Schumacher said.

In the second quarter of that year, the one-time capacity sales were 8.2 percent of the total revenue of $5.2 billion, or about 41 percent of the revenue growth compared with the 2000 second quarter, he said.

The controller said he believed the one-time sales, often referred to as IRUs for indefeasible rights of use, were a significant piece of revenue that should have been released publicly.

He said he complained to his boss, then-Chief Financial Officer Robin Szeliga, who disagreed about public disclosure for the first quarter but agreed with him in the second quarter.

The first time Qwest publicly acknowledged information about the IRUs was in August 2001, about a month before it lowered its full-year financial targets.

Schumacher was working at former Baby Bell U S West Inc. before the company merged with Qwest in June 2000. He described a changed culture under Nacchio's reign, where there was an aggressive push to meet targets.

"There was a very, very intense focus on reaching the targets quarter to quarter," he said.

Schumacher, testifying under immunity from criminal prosecution, said he reached a settlement in a civil fraud case filed by the Securities and Exchange Commission and agreed to pay a $40,000 fine, but he is still permitted to work at public companies.

Nacchio, who resigned under pressure from Qwest Communications International Inc. in 2002, is accused of 42 counts of insider trading. Each count carries a penalty of up to 10 years in prison and a $1 million fine.

In his motion, Traskas said the government would have David Weinstein, a financial consultant to Nacchio, testify that Nacchio transferred more than $90 million in assets, including Qwest securities, from accounts in his name or held jointly with his wife, into accounts held solely by his wife.

Nacchio was motivated by a "desire to hide his assets" and "to avoid suffering a loss, which bears strong similarity to the desire that motivated his insider sales several months before," Traskas alleged.

Also Wednesday, Grant Graham, a former finance vice president for Qwest's global unit, testified that global unit officials believed they could land $119 million in government contracts, including classified business, for the second half of 2001. That compared with the unit's overall forecast of $4 billion for the same period.

Graham said unit managers were concerned about meeting 2001 financial targets, noting it faced aggressive competition and was losing traditional phone service lines as the economy was slowing.

The unit was responsible for large business, government and public education contracts for telecommunications services. It earned about $4.5 billion in 2000 and its forecast for 2001 was $7.3 billion, Graham said.

The government's case is grounded in 2000 and 2001, when Qwest acquired U S West.

SEC regulators say Qwest falsely reported one-time sales as recurring revenue between April 1999 and March 2002. That allowed the company to improperly report approximately $3 billion in revenue, which helped it acquire U S West, the SEC has alleged.

Based in Denver, Qwest is the primary telephone service provider in 14 mostly Western states.