The indictment is the first criminal charge against Nacchio in the government's nearly 4-year-old investigation into accounting practices at Qwest, the Denver-based primary telephone service provider in 14 states.
Nacchio, 56, was in custody and his initial court appearance was expected later Tuesday, said Jeff Dorschner, a spokesman for federal prosecutors. He said other information would be released later, including details of the allegations.
Nacchio already faces civil charges filed by the Securities and Exchange Commission and shareholder lawsuits.
The government has alleged in both civil and criminal cases that Qwest and some of its former executives participated in a massive financial fraud between April 1999 and March 2002 by falsely reporting sales or trades of capacity on its fiber-optic cables as recurring revenue. Nacchio resigned in June 2002 and has always said he did nothing improper.
The fraud allowed Qwest to improperly report approximately $3 billion in revenue that eased its 2000 acquisition of regional phone company U S West Inc. , the government has said. Qwest later restated earnings from 2000 and 2001 to erase about $2.2 billion in revenue.
A federal grand jury that has been weighing the evidence against Nacchio was meeting this week for the last time this year. Grand jury members have been investigating alleged illegal activity for months.
Nacchio arrived at Denver International Airport Tuesday night, but did not make any statement to reporters and photographers who had been waiting for him.
Denver-based Qwest, the fourth-largest U.S. regional phone carrier, and its executives have been the target of legal action since the 2002 restatement.
A judge has given prosecutors until Dec. 31 before legal proceedings can resume in civil lawsuits that remain open against Nacchio and other Qwest executives.
Nacchio, who joined Qwest in 1997 and was ousted by the board in 2002, has hired a high-profile defense team that includes former Iran-Contra special prosecutor and federal judge Herbert Stern and Charles Stillman, a New York lawyer.
Nacchio has repeatedly denied any wrongdoing, including in testimony before a Congressional panel in 2002.
Six former Qwest executives have been charged in the alleged securities fraud investigation.
Robin Szeliga, the company's former chief financial officer, is the highest level executive charged so far. In July, she pleaded guilty to one count of insider trading and agreed to cooperate with authorities in the investigation.
In her plea agreement, Szeliga said Qwest's senior managers were aware the company was boosting revenue figures through deals unknown to investors.
Earlier this month, two former top-level Qwest executives, chief legal officer Drake Tempest and president Afshin Mohebbi, testified before the grand jury against Nacchio. Mohebbi has been given immunity in exchange for his cooperation, according to a person familiar with the legal proceedings.
More than a dozen lawsuits have been filed against Qwest and former executives by shareholders, including several large pension funds. The shareholders claim they lost millions when Qwest stock plummeted from a high of more than $64 per share in 2000 to below $2 in 2002.
Last month, the company reached a $400 million settlement with some shareholders, but suits against Nacchio remain open.
Last fall, Qwest agreed to pay $250 million to settle a fraud case brought by the Securities and Exchange Commission. In March, the SEC sued 11 former Qwest executives, including Nacchio, accusing them of fraudulently reporting $3 billion in revenues while omitting $231 million in expenses from the company's books.
The SEC alleges Nacchio reaped $216 million in "salary, bonuses, stock sales and other compensation" based on the inflated numbers.
Reuters and the Associated Press contributed to this report.