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Pension Fund to Sue Qwest In Securities-Fraud Lawsuit
Dow Jones Newswires
The Wall Street Journal
Thursday, April 20, 2006

NEW YORK -- New York State Comptroller Alan G. Hevesi filed a securities-fraud lawsuit against Qwest Communications International Inc., its former top executives, several former directors and its onetime auditor Arthur Andersen LLP, alleging they conspired to artificially inflate the company's financial results.

The lawsuit, filed in U.S. District Court in Manhattan, alleges the Denver telecommunications company's revenue and earnings were "significantly and materially" overstated between March 31, 1999, and July 28, 2002.

Mr. Hevesi filed the suit on behalf of the  New York State Common Retirement Fund, a large pension fund for New York public employees.  He is the sole trustee of the fund.  John Chartier, a spokesman for Mr. Hevesi, said the pension fund's losses as a result of the alleged manipulation of Qwest's financial results were about $250 million.

Qwest's former Chief Executive Joseph Nacchio, a defendant in Mr. Hevesi's lawsuit, is awaiting trial on 42 counts of insider trading.  He has denied wrongdoing.

The company agreed last year to pay $400 million to settle separate shareholder lawsuits in federal court in Colorado.  Qwest previously agreed to pay $250 million to settle civil charges brought by the Securities and Exchange Commission.

A Qwest spokesman declined to comment about the New York case, saying the company's policy was to not speak about pending litigation.  An Arthur Andersen spokesman didn't have a comment.

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