Some say ex-Qwest exec's sentence is mere slap on wrist
By Jeff Smith
Rocky Mountain News
Tuesday, March 7, 2006
Does crime pay? That's what some are asking in the wake of
former Qwest executive Marc Weisberg being fined $250,000
Friday, and sentenced to 60 days of house arrest and two
years of probation.
Some believe the government struck a far-too-lenient deal
for an executive who made $2.9 million from allegedly
fraudulent transactions with vendors, not to mention an
additional $30 million by exercising Qwest stock options.
Lynn Turner, former chief accountant with the Securities and
Exchange Commission and a Colorado resident, was especially
"I think one must question how 60 days 'timeout' at home and
a $250,000 fine is even remotely close to being an adequate
or just penalty," Turner wrote by e-mail. He noted that
prosecutors initially charged Weisberg with 11 counts of
fraud and money laundering, and that Weisberg had failed to
apologize for his behavior.
Added Turner, who is now research director of the
shareholder advisory firm Glass Lewis & Co.: "When you
consider investors, including many retirees, lost billions
during this time period and employees' ultimately lost jobs,
this settlement looks awful lax."
Turner noted the lead prosecutor himself said Friday that
Qwest's conflict-of-interest policy had been "badly
abused." And a New York judge recently ruled an investment
bank in a similar situation had engaged in a "sophisticated
form of bribery."
Denver federal Judge Robert Blackburn, in approving the plea
deal, said Weisberg, as a convicted felon, will be "forever
branded" in the corporate world with "Hawthorne's Scarlet
Weisberg, 48, of Cherry Hills Village, was accused of
secretly persuading suppliers to allocate low-priced stock
to his personal accounts, his relatives and even his wife's
fitness trainer. He managed Qwest's corporate investments
between 1999 and 2001.
U.S. Attorney for Colorado William Leone, whose office
prosecuted Weisberg, has defended the plea deal and sentence
as sending a "deterrent message" to corporate executives.
Leone has stressed the significance of a felony conviction,
the fact the case was in relatively unchartered legal
waters, and the agreement by Weisberg to cooperate as a
potential witness against former Qwest CEO Joe Nacchio.
For his part, Weisberg, while acknowledging guilt on one of
the 11 charges, overall has been unrepentant. Weisberg has
suggested that he's a "symbol" of the Qwest scandal and that
his chances of getting a fair trial were diminished because
of the insider-trading charges against Nacchio.
Most of the various points of view make sense to Craig
Silverman, a former Denver deputy district attorney who
knows both the defense and prosecution team.
"It is significant and punishing to suffer a felony
conviction," Silverman said. "A lot of doors get closed.
However, becoming a millionaire can buy you a lot of new
doors to open."
Silverman said most people charged with serious crimes are
concerned first about their freedom, and Weisberg, he noted,
will have that freedom.
"There appeared to be a lot of bargain in this plea
bargain," he said.
Silverman said the case may have been difficult to prove at
"Friends and family allocations of new (stock) issues goes
on every day all over the country," Silverman said. "Some
people think it's fair and some people think it's an abuse,
but it happens and there's a lot of gray areas when it comes
to these situations. I'm sure the defense had experts
prepared to testify that this . . . is a routine part of the
modern business world."