The Association of U S West Retirees



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Accusations of an "alleged plot" resurfaces.....

Phyllis Kielblock
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Qwest case finger-pointing
Former accountant, lawyer name SEC figures in alleged plot
By Jeff Smith, Rocky Mountain News
May 10, 2006

A former Qwest accountant alleges the Securities and Exchange Commission's top enforcement cop in Washington wanted to sue him for fraud even though the SEC's Denver regional director acknowledged the accountant had a strong defense.  Former Qwest accountant James Kozlowski has made the general claims before.  But a Denver federal court filing this week by Kozlowski's attorney Kevin Evans actually named the high-ranking SEC officials involved in the alleged politicking.

Randall Fons, former director of the SEC's regional office in Denver, was identified as the SEC official who allegedly told Evans in December 2004 that he had made a persuasive argument against civil-fraud charges being filed against Kozlowski.

Evans alleges Stephen Cutler, then the SEC's top enforcement director, said at a later meeting that "the SEC had several investigations in which accountants were pointing fingers at each other, and the SEC needed to send a message to the accounting community."

The SEC last March filed civil fraud charges against seven former Qwest executives, including Kozlowski and former CEO Joe Nacchio, alleging they participated in a $3 billion financial fraud between 1999 and 2002.

Evans also has argued that Kozlowski got sued because he didn't "spill the beans" against Nacchio.

Fons, now a partner at the law firm Morrison & Foerster in Denver, didn't immediately comment when contacted Tuesday.

Cutler, now with the law firm WilmerHale in Washington, D.C., didn't respond to a telephone call and e-mail for comment.

It's not the first time regulators or prosecutors have been accused of charging someone connected to the Qwest case just to have an accountant as one of the defendants.

Former Qwest controller Bryan Treadway was indicted in connection with an Arizona revenue-inflation case but was acquitted by a jury in 2004 of all 11 counts against him.,2777,DRMN_23910_4686557,00.html