Szeliga guilty plea
expected today in case of Qwest insider trading
Ex-CFO's admission could aid federal case against Nacchio
By Jeff Smith
Rocky Mountain News
Thursday, July 14, 2005
Qwest Communications' former Chief Financial Officer Robin Szeliga is expected to plead guilty to insider trading this morning in Denver federal court, a move that could bolster the prosecution's case against former CEO Joe Nacchio.
Some experts have said they think Szeliga, a 44-year-old Littleton resident, could get probation rather than jail time if she cooperates fully with investigators, who are focusing on Nacchio's role in the alleged securities fraud. The sentence, which also will be up to the judge, is expected to be announced later this year.
"This has to make Joe Nacchio nervous," said Craig Silverman, a former Denver deputy district attorney who has followed the three-year-old Qwest criminal case.
Federal prosecutors in June charged Szeliga with pocketing stock profits of $125,000 in April 2001 at a time she allegedly knew the Denver telco was misleading investors about its true financial condition.
The insider trading charge against Szeliga suggests federal prosecutors may be zeroing in on a narrow window of time in the spring of 2001 when Nacchio sold nearly $50 million of his Qwest stock. Nacchio made around $250 million altogether during his five-year tenure at Qwest.
"As he has said from the beginning, Mr. Nacchio did absolutely nothing wrong," Nacchio spokeswoman Marcia Horowitz said recently. "These matters are now before the courts and will be addressed there."
Szeliga worked out a tentative plea agreement with prosecutors just prior to the June charges, but today's hearing in front of federal Judge Walker Miller represents the formal change of plea hearing.
Szeliga's attorneys didn't respond to phone calls for comment.
Jeff Dorschner, spokesman for the U.S. attorney's office in Colorado, declined comment.
Silverman noted that until Szeliga formally pleads guilty, she maintains her right not to testify or incriminate herself.
But once she pleads guilty, her Fifth Amendment privilege goes away and "whether she wants to or not, Robin Szeliga will be in a position to be a (government) witness," Silverman said.
Szeliga's hearing comes at a time when corporate wrongdoing during the telecommunications bubble is still very much in the news.
On Wednesday, former WorldCom Chairman Bernard Ebbers was sentenced to 25 years in prison for his role in overseeing the largest corporate fraud in U.S. history.
Szeliga is the sixth former Qwest executive to face criminal charges since the government launched its investigation of Qwest more than three years ago. She is the highest-ranking official named so far.
Silverman said that before Szeliga is sentenced later this year, prosecutors and the judge will consider to what extent she has cooperated and provided truthful testimony about others.
Silverman stopped short of saying Szeliga could avoid jail, but other experts previously have said they think it's possible she will get only probation.
Szeliga also has reached a tentative settlement on civil fraud charges filed against her by the Securities and Exchange Commission. To resolve the criminal and civil charges, Szeliga also is expected to relinquish her stock profits from April 2001 and agree not to serve as an officer of a publicly held company for a specified time.
"It would appear Robin Szeliga is trying to mitigate her wrongful behavior and the consequences of that behavior. She's trying to cut her losses," Silverman said. "But, of course, if the deal is perceived as too sweet for Robin Szeliga, then the defense attorneys for (others who might be charged) will have a field day with that."