The Association of U S West Retirees



Ex-Qwest accountant OK'd to subpoena files
By Sandy Shore, The Associated Press
Denver Post
Wednesday, November 15, 2005

Denver - A former Qwest Communications accountant won the right Tuesday to subpoena an accounting firm's analysis of how the company recorded network capacity sales, a method that later forced it to restate billions of dollars of revenue.

James Kozlowski recalled there being a KPMG analysis of the transactions, but the report was not included in nearly three dozen boxes of documents turned over as part of the government's civil fraud lawsuit, attorney Kevin Evans said.

"He firmly believes there should be work papers and accounting memos," Evans told Magistrate Judge Craig Shaffer during a brief hearing.  "We're very concerned about the potential loss of these documents."

Shaffer agreed to allow Evans to issue a subpoena for specific documents related to four sales in 1998 and early 1999.

Outside the courtroom, Evans said the analysis dealt with whether it was appropriate to book revenue for fiber-optic capacity sales upfront or over time.  The four transactions were the first that Qwest completed using the upfront booking method, he said.

The Securities and Exchange Commission has accused Kozlowski and other former executives of orchestrating a massive financial fraud at Qwest between April 1999 and March 2002.  Other defendants include former chief executive Joe Nacchio and former chief financial officers Robin Szeliga and Robert Woodruff.

The SEC said their actions allowed Qwest to improperly report approximately $3 billion in revenue that helped clear the way for its 2000 acquisition of U S West.