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The Association of U S West Retirees
 

 

 

Weisberg deal derided
Some say ex-Qwest exec's sentence is mere slap on wrist
By Jeff Smith
Rocky Mountain News
Tuesday, March 7, 2006 

Does crime pay?  That's what some are asking in the wake of former Qwest executive Marc Weisberg being fined $250,000 Friday, and sentenced to 60 days of house arrest and two years of probation.

Some believe the government struck a far-too-lenient deal for an executive who made $2.9 million from allegedly fraudulent transactions with vendors, not to mention an additional $30 million by exercising Qwest stock options.

Lynn Turner, former chief accountant with the Securities and Exchange Commission and a Colorado resident, was especially critical Monday.

"I think one must question how 60 days 'timeout' at home and a $250,000 fine is even remotely close to being an adequate or just penalty," Turner wrote by e-mail.  He noted that prosecutors initially charged Weisberg with 11 counts of fraud and money laundering, and that Weisberg had failed to apologize for his behavior.

Added Turner, who is now research director of the shareholder advisory firm Glass Lewis & Co.:  "When you consider investors, including many retirees, lost billions during this time period and employees' ultimately lost jobs, this settlement looks awful lax."

Turner noted the lead prosecutor himself said Friday that Qwest's conflict-of-interest policy had been "badly abused."  And a New York judge recently ruled an investment bank in a similar situation had engaged in a "sophisticated form of bribery."

Denver federal Judge Robert Blackburn, in approving the plea deal, said Weisberg, as a convicted felon, will be "forever branded" in the corporate world with "Hawthorne's Scarlet Letter."

Weisberg, 48, of Cherry Hills Village, was accused of secretly persuading suppliers to allocate low-priced stock to his personal accounts, his relatives and even his wife's fitness trainer.  He managed Qwest's corporate investments between 1999 and 2001.

U.S. Attorney for Colorado William Leone, whose office prosecuted Weisberg, has defended the plea deal and sentence as sending a "deterrent message" to corporate executives.

Leone has stressed the significance of a felony conviction, the fact the case was in relatively unchartered legal waters, and the agreement by Weisberg to cooperate as a potential witness against former Qwest CEO Joe Nacchio.

For his part, Weisberg, while acknowledging guilt on one of the 11 charges, overall has been unrepentant.  Weisberg has suggested that he's a "symbol" of the Qwest scandal and that his chances of getting a fair trial were diminished because of the insider-trading charges against Nacchio.

Most of the various points of view make sense to Craig Silverman, a former Denver deputy district attorney who knows both the defense and prosecution team.

"It is significant and punishing to suffer a felony conviction," Silverman said.  "A lot of doors get closed.  However, becoming a millionaire can buy you a lot of new doors to open."

Silverman said most people charged with serious crimes are concerned first about their freedom, and Weisberg, he noted, will have that freedom.

"There appeared to be a lot of bargain in this plea bargain," he said.

Silverman said the case may have been difficult to prove at trial.

"Friends and family allocations of new (stock) issues goes on every day all over the country," Silverman said.  "Some people think it's fair and some people think it's an abuse, but it happens and there's a lot of gray areas when it comes to these situations.  I'm sure the defense had experts prepared to testify that this . . . is a routine part of the modern business world."

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_4519687,00.html