Accounting & Tax

Former Qwest Exec to Pay $2.1 Million

Department of Justice requests that the SEC civil lawsuit be suspended while their criminal investigation continues.
Craig SchneiderJuly 27, 2005

Gregory Casey, a former executive vice president of wholesale business for Qwest Communications International Inc., has agreed to pay $2.1 million to settle civil charges concerning his participation in a $3 billion accounting fraud, reported the Associated Press.

In March, the Securities and Exchange Commission charged Casey, former chief executive officer Joseph Nacchio, former chief financial officers Robin Szeliga and Robert S. Woodruff, and 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 alleged that, between 1999 and 2002, the individuals engaged in a multi-faceted fraudulent scheme designed to mislead the investing public about the company’s revenue and growth.

Qwest agreed last year to pay $250 million to settle SEC fraud charges in a deal that did not include individuals.

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As for Casey, prosecutors accused him of backdating contracts, allowing Qwest to recognize revenue it hadn’t yet received. Under terms of his settlement, in which Casey neither admitted nor denied wrongdoing, he also agreed to cooperate with the Securities and Exchange Commission’s investigation and not act as an officer or director of a public company for five years, reported the Associated Press.

Separately, federal prosecutors have requested that a judge suspend the SEC civil lawsuit against Nacchio and other former executives for five months while their criminal investigation continues, according to the Denver Post. The Department of Justice warned that “sensitive information” gathered in its investigation could be disclosed if the civil case were proceeded to the discovery phase, reported the Post.

Earlier this month, Szeliga pleaded guilty to a criminal count of insider trading and agreed to cooperate in the investigation. She also has reportedly reached a deal with the SEC, but details have not been disclosed. Two other former Qwest executives, Grant Graham and Thomas Hall, are also said to be cooperating.

Nacchio has repeatedly denied any wrongdoing during his tenure at Qwest.