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Ex-Qwest leader may turn witness
By Greg Griffin, Staff Writer
Denver Post
Friday, December 2, 2005

Former Qwest president and chief operating officer Afshin Mohebbi is likely to testify for the prosecution in a potential criminal trial against former chief executive Joe Nacchio, according to sources.

He is not expected to plead guilty to a criminal charge and may have been granted immunity from prosecution in return for testimony that could implicate Nacchio, said several people close to the case who requested anonymity.

Mohebbi, 43, would be at least the second high-ranking former Qwest official secured by the government as a witness in the case it is building against Nacchio, who hasn't been charged.  Former Qwest chief financial officer Robin Szeliga pleaded guilty in July to a felony charge of insider trading and agreed to cooperate with the government.

Legal experts say the prospect of testimony from Mohebbi, the company's former No. 2 executive, could be critical for the prosecution.

"It would be significant to have a straight cooperative deal with an executive at that level.  It would indicate they have very valuable evidence to offer," said Tony Leffert, a former federal prosecutor and attorney with Robinson, Waters & O'Dorisio in Denver who is not involved in the Qwest case.

Mohebbi's attorney, Paul Grand, would not comment on his client's status in the criminal investigation.  Mohebbi did not return a call late Thursday.  Representatives of the U.S. Attorney's Office would not comment.

Prosecutors are expected to seek an indictment against Nacchio from a federal grand jury in the next few weeks.  They have said in court filings that their investigation focuses on insider trading and disclosure issues in 2000 and 2001.

Nacchio sold Qwest stock for a profit of $176.5 million from 1999 to 2001 while he allegedly led a fraudulent scheme to inflate revenues and mislead investors, according to federal regulators.  The Securities and Exchange Commission sued Nacchio and other former Qwest executives in March.

Attorneys for the former Qwest CEO have said Nacchio sold his stock using established legal procedures and that Qwest met its disclosure obligations.

Nacchio's legal team also plans to argue that he knew of lucrative, secret national-security contracts that Qwest was in line to receive from the government at the time he was selling shares, according to a Wall Street Journal report last week.  According to the theory, that knowledge would indicate that Nacchio was not misleading investors with positive talk about Qwest's financial condition prior to the stock's plunge in 2001 and 2002.

His attorneys, Charles Stillman and Herbert Stern, did not return calls for this story.

In their case against Szeliga, prosecutors focused on a period in late April 2001 when Qwest executives allegedly knew the company would not make its revenue projections without booking questionable deals.

The government charged Szeliga with selling 10,000 Qwest shares on April 30 for a pretax gain of $125,000.  Nacchio sold 760,000 shares worth $30 million from April 26 to 30, according to Thompson Financial.

Mohebbi did not sell a single share of Qwest stock while he worked there, making him a difficult target for prosecutors.  He was known as a capable operations chief who countered Nacchio's volatile personality.

But Mohebbi hasn't been above suspicion.  The SEC singled him out for pushing the sales force to close questionable deals, sometimes in the last days of the quarter.  The SEC also said Mohebbi and others entered into secret side agreements and falsified documents to hide those deals from Qwest's accountants and outside auditors.

In a May 2001 e-mail, Mohebbi told a colleague, "Business is in bad shape ... need a ton of one-time items to make the quarter," according to the SEC.

Mohebbi came to Qwest from British Telecom in May 1999 and left in December 2002, several months after Nacchio departed.

Staff writer Greg Griffin can be reached at 303-820-1241 or