Monday, March 14, 2005

SEC Charges Former Qwest CEO Joseph Nacchio and Eight Others with Massive Fraud

The Securities and Exchange Commission today charged Joseph P. Nacchio, former co-chairman and chief executive officer of Qwest Communications International Inc., and eight other former Qwest officers and employees with fraud and other violations of the federal securities laws. In three separate but related civil actions, the Commission alleges that, between 1999 and 2002, the Qwest defendants engaged in a multi-faceted fraudulent scheme designed to mislead the investing public about the company's revenue and growth.

"The disclosure fraud at Qwest was orchestrated at the highest level of the company to deceive investors," said Randall J. Fons, Regional Director of the Commission's Central Regional Office in Denver. "Qwest's CEO and other top executives projected revenue and earnings that they knew were overly aggressive, and then all of the defendants used smoke and mirrors to meet those unrealistic projections. These individuals must now answer for their conduct and the enormous decline in shareholder value that they caused."

In addition to Nacchio, the Commission's complaints name former chief financial officers Robert S. Woodruff and Robin R. Szeliga, former chief operating officer Afshin Mohebbi, former executive vice president of wholesale markets Gregory M. Casey, former senior vice president of pricing and offer management Roger B. Hoaglund, former senior vice president of finance William L. Eveleth, former director of financial reporting James J. Kozlowski, and former senior manager of financial reporting Frank T. Noyes. The complaints seek injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against all of the defendants, and officer/director bars against Nacchio, Woodruff, Szeliga, Mohebbi, Casey, and Eveleth.

  • In June 2002, Joseph P. Nacchio was forced to resign as CEO of Qwest Communications.


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