Ex-Qwest Exec Pleads Guilty to Wire Fraud
Marc Weisberg, Former Senior Vice President at Qwest
Communications, Pleads Guilty to Wire Fraud
By Jon Sarche, Associated Press Writer
Wednesday, December 28, 2005
DENVER (AP) -- Former Qwest Communications executive Marc
Weisberg pleaded guilty Wednesday to wire fraud and agreed
to cooperate with federal prosecutors trying to convict
former Chief Executive Joseph Nacchio of illegally dumping
more than $100 million in stock.
Weisberg, a former senior vice president who oversaw
investments, mergers and acquisitions for Denver-based Qwest
Communications International Inc., pleaded guilty to a
single count of fraud. He had faced eight counts of wire
fraud and three counts of money laundering.
The plea came a week after Nacchio was indicted on 42 counts
of insider trading and on the same day that Enron's former
top accountant, Richard Causey, pleaded guilty to securities
fraud and agreed to cooperate with prosecutors investigating
the Houston company.
"In today's atmosphere, there is simply too great a risk
that a jury may be persuaded to paint Mr. Weisberg with the
broad brush of alleged impropriety at Qwest," defense
attorneys Stephen Peters and Gary Lozow said in a statement.
Prosecutors declined comment. They have said their
investigation of Qwest is substantially complete with
Weisberg, who is free on $1 million unsecured bond, faces a
March 3 sentencing hearing.
Prosecutors have said Weisberg's case was not directly
connected to the accounting scandal that forced Qwest to
restate billions in revenue. Instead, they accused Weisberg
of improperly earning $2.9 million for himself, family
members and friends from 1999 to 2001 by demanding that
vendors offer them shares in other companies in return for
doing business with Qwest, the telephone provider for 14
mostly Western states.
In a plea agreement filed with a federal judge, Weisberg
admitted to buying stock in a California company in March
2000 and failing to report the deal to Qwest. He sold the
stock in 2001 at a loss of about $529,000, the document
Prosecutors said they will seek 60 days of in-home
detention, two years of probation and a $250,000 fine
against Weisberg, 48. He had faced decades in prison, huge
fines and forfeiture of $2.9 million if convicted of the
Weisberg joins former Qwest Chief Financial Officer Robin
Szeliga as a potential witness in future cases. She pleaded
guilty in July to one count of insider trading and agreed to
cooperate with investigators. In addition, former Qwest
President Afshin Mohebbi has been granted immunity and is
expected to testify.
The plea deal could mean prosecutors are concerned about
their case against Nacchio -- or it could mean Weisberg can
provide important testimony, said Jacob Frenkel, a former
federal prosecutor and former lawyer for the Securities and
"The government would certainly love to be able to expand
its indictment against Mr. Nacchio," he said. "The
government wants to have cooperating senior executives in
the fold as cooperating witnesses because corporate fraud
cases are difficult cases to prove and they almost always
turn on the help of senior insiders. (Prosecutors) need to
know who was saying what to whom."
The charges against Nacchio and the deal with Weisberg come
three years after the government trumpeted the first
indictments in the Qwest investigation as an example of the
crackdown on white-collar crime.
Nacchio is accused of illegally selling off $101 million in
stock over five months in 2001 after learning the company
might not meet its financial goals and keeping that
information from stockholders. Prosecutors have refused to
discuss who allegedly warned Nacchio about revenue problems
The government has said Qwest and some of its former
executives participated in a massive fraud between April
1999 and March 2002 by falsely reporting one-time sales or
trades of capacity on its fiber-optic cables as recurring
The fraud allowed Qwest to improperly book approximately $3
billion in revenue that eased its 2000 merger with U S West
Inc. and helped various executives to reap millions in
"ill-gotten" profits, the government has said. Qwest later
restated earnings from 2000 and 2001 to erase about $2.2
billion in revenue.
Last month, Qwest said it would pay $400 million to settle
the claims of tens of thousands of shareholders who
purchased Qwest securities. The company earlier agreed to
pay $250 million to settle Securities and Exchange
Commission charges of fraud without admitting wrongdoing.