Pair seek separate Qwest fraud trial
By Sandy Shore, Associated Press
Rocky Mountain News
Thursday, October 18, 2007
Two former Qwest Communications accountants claim their rights
will be violated if they are tried on civil fraud charges at the
same time as three high-ranking one-time executives, including
former CEO Joe Nacchio. Attorneys for accountants James
Kozlowski and Frank Noyes argued in a brief filed late Tuesday
that it could be hard for a jury to hear the complicated
evidence at one trial and try to sort out what applies to each
"The resulting risk of verdict against Kozlowski and Noyes
predicated on confusion, frustration or spillover of
inadmissible evidence is so substantial that a separate trial or
severance is necessary," the two attorneys said.
Kozlowski, Noyes, Nacchio, former finance chief Robert Woodruff
and former President Afshin Mohebbi are accused of committing a
fraud that nearly forced the Denver telco into bankruptcy.
The Securities and Exchange Commission has said the executives'
actions between April 1999 and March 2002 paved the way for
Qwest to improperly report about $3 billion in revenue that
helped seal its 2000 acquisition of former Baby Bell U S West.
Qwest later restated $2.2 billion in revenue.
The SEC wants repayment and civil penalties with amounts to be
set at trial. No trial date has been set.
The SEC has asked a judge overseeing the case to deny the
accountants' request for a separate trial, arguing that they
were senior managers with "significant responsibility" at Qwest.
The agency also says it would be inconvenient and costly if it
is required to conduct two trials, noting the duplications of
witnesses and evidence that would be involved.
In April, Nacchio was convicted in a separate criminal trial of
19 counts of insider trading stemming from the sale of $52
million worth of stock in 2001 at a time when he knew the
company was at financial risk but didn't tell investors.
Nacchio was sentenced to six years in prison but remains free on
bond pending an appeal.