A former CFO for a subsidiary of Qwest Communications International Inc. is the subject of civil fraud charges filed by the Securities and Exchange Commission.
The SEC complaint, filed in U.S. District Court in Denver, alleged that former Qwest Wireless chief financial officer Michael Felicissimo concealed a $112 million overstatement of revenues from mobile-phone products and services.
Between January 2000 and September 2001, the SEC alleged, Qwest Wireless improperly recorded revenue from mobile-phone accessories that were given away to customers — free, that is — as an inducement to buy other products and services. The company’s accounting group informed Felicissimo of the errors, but rather than report it to the president of Qwest Wireless or other Qwest executives, Felicissimo concealed the resulting overstatements and directed others to do the same, according to the complaint.
The SEC is seeking the return of compensation, bonuses and other income stemming from the alleged overstatements and an order barring Felicissimo from serving as a director or officer of a publicly held company.
“The criminal investigation into certain business practices [at Qwest] is ongoing,” said Jeff Dorschner, a spokesman for the U.S. Attorney’s office, according to the Associated Press. Qwest spokesman Bob Toevs said the company continues to cooperate with the SEC and the Department of Justice; Felicissimo did not immediately return an AP phone call seeking comment.
The SEC and the Justice Department began investigating Qwest in 2002 for allegedly inflating revenue through fraudulent transactions with other telecommunications companies. Last October, the company restated its financials for 2001 and 2002 to lower revenue by about $2.5 billion.