The Association of U S West Retirees



SEC asks judge to deny separate trials in Qwest fraud case
By Sandy Shore, AP
Friday, October 5, 2007

DENVER (AP)  -  Federal regulators asked a judge Thursday to reject a motion seeking a separate trial for two former Qwest accountants who are among five one-time executives of the telecommunications company facing civil fraud charges.

In a 13-page brief, Securities and Exchange Commission attorneys argued that James Kozlowski and Frank T. Noyes were senior managers with "significant responsibility" when they worked at Denver-based Qwest.

The two men, former Qwest CEO Joe Nacchio, former finance chief Robert Woodruff and former President Afshin Mohebbi are accused of committing a fraud that nearly forced Qwest Communications International Inc. into bankruptcy.

The SEC has said the executives' actions between April 1999 and March 2002 paved the way for Qwest to improperly report approximately $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 determined at trial.  No trial date has been set.

Noyes and Kozlowski asked the court to separate their trial from that of the other three, arguing the allegations against them were narrower in scope and they would be denied a fair trial if all five were tried together.

"There would be so much evidence that does not pertain to Kozlowski and Noyes that there would be a very real and substantial danger of jury confusion and impermissible spillover of evidence that would be inadmissible in a separate trial," their attorneys argued in a U.S. District Court brief.

SEC attorney Christopher Friedman countered in Thursday's brief that Kozlowski and Noyes failed to show how a single trial would harm their fair-trial rights but it would be inconvenient and costly for the regulatory agency to be required to conduct two trials.

In a separate criminal trial, Nacchio was convicted in April 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 of the conviction.