The Securities and Exchange Commission settled civil fraud charges against two former Qwest Communications International, Inc. officers. The charges involved the alleged roles of the ex-officers in helping the telecom overstate revenues.
Augustine Cruciotti, a former senior vice president of Qwestlink, the company’s fiber-optic construction unit, agreed to pay $350,000, including the disgorgement of $200,000 in illegally obtained gains and a civil penalty of $150,000. Steven Haggerty, the unit’s former regional vice president, agreed to pay a $30,000 penalty.
Haggerty paid a much smaller penalty because he provided the SEC with “useful evidence” in the agency’s ongoing investigation into Qwest’s accounting practices, according to published reports citing Katherine Addleman, the commission’s assistant regional director of enforcement. Haggerty also held a lower position with less responsibility, Addleman reportedly added.
The SEC alleged that Qwest used accounting tricks when it needed to meet sales and earnings targets. Cruciotti authorized side agreements that enabled Qwest to improperly recognize $26.6 million of revenue from three transactions in the first and second quarters of 2001, according to the SEC’s complaint, which alleged that the improper recognition contributed to Qwest’s ability to meet its revenue targets for those quarters.
Haggerty allegedly assisted in providing the side agreements, which were concealed from Qwest’s accountants and outside auditors. The Associated Press reported that it could not reach attorneys for the two former executives or Qwest for comment.
Separately, Thomas Hall, a former Qwest executive, pleaded not guilty to fraud charges in am alleged scheme to improperly book nearly $34 million in revenue, according to AP. In April, after a seven-week trial, a jury reportedly ended up deadlocked in its attempt to decide on a similar set of charges against Hall.