SEC to review, perhaps trim, Qwest fraud suit
By Sandy Shore, Associated Press
Wednesday, February 5, 2008
Federal regulators agreed Monday to review and perhaps
streamline their civil fraud lawsuit against former Qwest
executives so the allegations would not involve the telecom's
secret business dealings with clandestine government agencies.
During a federal court hearing, Securities and Exchange
Commission attorney Polly Atkinson said the bulk of the charges
against former chief executive Joe Nacchio and four others rely
on historical data, not prospective government contracts.
However, she agreed to review the lawsuit at U.S. Magistrate
Craig Shaffer's request. Shaffer gave the SEC 30 days for the
The judge's comments came as he considered a request from the
Justice Department to prohibit the release of material related
to secret Qwest negotiations, arguing that it would jeopardize
The SEC has said the defendants' actions allowed Denver-based
Qwest to improperly report approximately $3 billion in revenue
that helped clear the way for its 2000 acquisition of the
regional phone company U S West. The revenue was later
The classified government material at issue is based on
Nacchio's claims that Qwest would be in line for lucrative
business contracts that gave him hope for the telecom's
Attorneys for the defendants in the civil trial told Shaffer on
Monday that the secret documents may — or may not — be part of
their defense on some of the allegations.
Besides Nacchio, the defendants are former finance chief Robert
Woodruff, former president Afshin Mohebbi and former accountants
James Kozlowski and Frank T. Noyes.