to settle Qwest fraud case, judge urges talks
By Jeff Smith
Rocky Mountain News
Thursday, January 11, 2007
Federal Magistrate Judge Craig Shaffer wants to resolve
quickly a nearly two-year-old government civil fraud case
against a handful of former Qwest executives, and on
Wednesday he again encouraged settlement discussions.
Securities and Exchange Commission official Polly Atkinson
said the regulatory agency is "always interested" in
discussing possible settlements. Atkinson noted, however,
that the most productive negotiations probably will occur
after former Qwest CEO Joe Nacchio's criminal trial is
completed this spring.
The SEC has reached a tentative settlement with former Qwest
Chief Financial Officer Robin Szeliga, court documents say.
Details haven't been disclosed.
Phillip Douglass, attorney for former Qwest accountant James
Kozlowski, said his side has had some informal discussions
with the SEC, but he didn't sound optimistic about a
settlement anytime soon.
Civil-fraud charges also are pending against Nacchio, former
Chief Operating Officer Afshin Mohebbi, former Chief
Financial Officer Robert Woodruff and former Qwest
accountant Frank Noyes.
Atkinson said to reporters after Shaffer's status conference
that court rules require settlement discussions. Colorado's
federal judges tend to encourage those discussions to take
place early and often.
Shaffer noted that 98 percent of the federal cases in
Colorado are settled before trial, and he told the attorneys
for the former Qwest executives to submit confidential
"settlement memos" by March 28. Such memos are supposed to
discuss the strengths and weaknesses of a case and give an
update on the possibility of a settlement.
The SEC in March 2005 accused a group of former Qwest
executives, including Nacchio, of orchestrating a massive $3
billion financial fraud between 1999 and 2002. Former top
sales executive Gregory Casey settled within weeks, while
others settled before the formal charges were filed.
Progress in the civil-fraud case has been slow because of
the separate insider-trading case against Nacchio, who is
scheduled to go to trial March 19.
For a while, the civil case virtually was frozen, but now
depositions of potential witnesses unrelated to Nacchio's
criminal case are beginning to take place. Two potential
witnesses have been deposed, Shaffer said, with another
dozen or so slated to be questioned between now and April.
- 10 cents