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Insider-trading charges may follow for the former CEO.
Stephen Taub and Dave Cook, CFO.com | US
June 3, 2005
Former Qwest chief financial officer Robin Szeliga has agreed to plead guilty to a single count of insider trading, according to the Department of Justice.
Szeliga, who is scheduled to be sentenced on July 14 in U.S. District Court in Denver, faces up to 10 years in prison and up to a $1 million fine. Several experts cited by the Rocky Mountain News, however, suggested that she might be sentenced only to probation if she cooperates fully with prosecutors in a widely expected case against former chief executive officer Joseph Nacchio.
According to the Justice Department, on April 30, 2001, Szeliga allegedly sold 10,000 shares of Qwest stock at $41 per share, obtaining gross proceeds of approximately $410,000. At the time, the DoJ asserted, Szeliga "knew that the various Qwest business units were not going to meet revenue targets and expectations for the first and second quarters of 2001."
The DoJ further alleged that Szeliga and others knew that Qwest was ultimately able to meet its announced 2001 first-quarter and second-quarter earnings expectations only "through the significant use of non-recurring revenue sources," which were used as publicly undisclosed "gap-fillers" to meet revenue targets.
Szeliga is the sixth — and highest-ranking — former Qwest executive to face criminal charges in the continuing investigation. "Clearly this serves as a stepping stone to Nacchio," said former federal prosecutor Christopher Bebel. The former Qwest CEO — who made nearly $250 million by selling his company's stock, reported the News, until his ouster in 2002 — has denied any wrongdoing.
Szeliga also reached a tentative settlement of civil charges brought by the Securities and Exchange Commission, the paper added.
Last fall, without admitting or denying the allegations, Qwest agreed to pay a civil penalty of $250 million to settle SEC securities fraud charges. The commission alleged that between 1999 and 2002, Qwest fraudulently recognized over $3.8 billion in revenue and excluded $231 million in expenses as part of a scheme to meet revenue and earnings projections.