Feds seek to protect info in Qwest probe
By Tom McGhee, Staff Writer
Denver Post
Thursday, August 4, 2005

Federal prosecutors have asked a judge to freeze class-action lawsuits against Qwest to avoid disclosure of information important to a criminal investigation of former senior Qwest executives.

"Permitting civil discovery to go forward may result in the premature disclosure of sensitive information that is important to the ... criminal case and investigation," the U.S. attorney's office in Colorado said in the motion filed Tuesday.

Prosecutors want to delay plaintiffs' lawyers in the lawsuit from questioning any witnesses until at least Sept 30.  The prosecutors also expect to ask that the questioning of some witnesses be delayed further.

Prosecutors could fear that witnesses questioned in the civil suits will contradict themselves in the criminal case, said former federal prosecutor Tony Leffert, an attorney with Robinson, Waters & O'Dorisio.

Prosecutors may also want to guard against giving defendants information during civil case testimony that they could use to build new defenses, said Brad Lam, a former SEC attorney who has a private practice in Denver.

In March, the Securities and Exchange Commission charged former chief executive Joe Nacchio and six other former executives with engineering a $3 billion financial fraud between 1999 and 2002.

Prosecutors requested a delay in that case as well, citing reasons similar to those spelled out Tuesday.

Magistrate Judge Craig Shaffer last week agreed to suspend the SEC fraud case for two months.

The U.S. attorney's office has been investigating the criminal case since 2002.  The probe heated up recently when former Qwest chief financial officer Robin Szeliga pleaded guilty to a felony charge of insider trading and agreed to cooperate in the investigation.

Prosecutors have reached agreements with two other former Qwest executives, Grant Graham and Thomas Hall, who are cooperating.

Wednesday's motion is one more gambit in a tangle of litigation that grew out of Qwest's financial meltdown.

Qwest shareholders filed a flurry of lawsuits against the company, Nacchio and others in 2001.

Those are the lawsuits, now consolidated into one case, that prosecutors are seeking to delay.

Plaintiffs' lawyer Mike Dowd, of Lerach Coughlin Stoia Geller Rudman & Robbins, didn't return a call asking for comment.

Staff writer Tom McGhee can be reached at 303-820-1671 or tmcghee@denverpost.com.