Former top-level Qwest executives look back, look ahead
Posted: 05/19/2013 12:01:00 AM MDT
By Andy Vuong
Joe Nacchio's scheduled release from a halfway house in September will effectively mark the end of the legal tsunami that resulted from federal investigations of Denver-based Qwest more than a decade ago.
The trials and tribulations of the former Qwest CEO, convicted in 2007 of felony insider-trading charges, have been well documented. But the stories of the top-level executives who worked closest to him have not.
Most were targets of a U.S. Securities and Exchange Commission lawsuit alleging that the team fraudulently booked $3 billion in revenue from 1999 to 2002. Some paid millions of dollars in fines to settle the claims. Others fought the allegations and won.
Their careers also took different paths as several reaped tens of millions in profits from selling Qwest shares and others sold little to no stock. One is now investing in startups, while another launched his own. Another spent years in the nonprofit sector.
In exclusive interviews with The Denver Post, two of those executives — Greg Casey and Robin Szeliga — told separate accounts of lessons learned during the Qwest days, how it impacted their lives and their plans moving forward.
"I don't regret anything about Qwest," said Casey, a top sales executive for the company from 1998 to 2002. "Everything that happened at Qwest was instructional and taught me a lot of lessons about different things, both in the company and how people behave outside the company."
Casey, the third employee hired by Nacchio, was considered a rainmaker, the salesman who could close a multimillion-dollar deal on a dime to help the company meet quarterly financial targets.Casey agreed to pay $2.1 million to settle the SEC allegations in 2005, without admitting or denying guilt, and testified for the Justice Department in the insider-trading case against Nacchio.
Casey earned more than $30 million in salary, bonuses and stock-sale profits while with Qwest.
He was a member of a team whose vision was ahead of its time. As a telecom upstart in the late 1990s, Qwest correctly predicted the growing demand for high-speed Internet capacity. But Qwest needed that surge to come far sooner than it did to justify the billions spent on a nationwide fiber-optic network and the company's takeover of landline phone giant US West in 2000.
"The idea that the network was doubling every month probably was a little preposterous," Casey said. "Ultimately, most of that bandwidth has been used, true to what was being said at the time."
Qwest teetered on the brink of bankruptcy after the accounting scandal and tech and telecom bust in the early 2000s. Employees, retirees and other shareholders lost countless millions amid the company's stock plunge from 2000 to 2002 that wiped out $91 billion in market value.
Qwest restated much of the revenue the SEC accused it of fraudulently recording and, in 2004, agreed to pay a $250 million fine. The company was acquired in 2011 by CenturyLink.
During the latter part of his
career with Qwest, Casey worked from
Now 55, he is the founder and CEO of Texas Energy Network, which is building high-speed 4G LTE networks into oil fields.
"We went where the big companies wouldn't go," Casey said. "They need the bandwidth with all the new technologies that oil-and-gas companies are using to explore all these shale plays."
Founded in 2010, the startup
secured $20 million in funding and is serving customers in
"This is by-the-book, return-on-investment business principles being applied," Casey said. "It's not 'Raise a bunch of capital and then spend it all and hope that customers will come.' We have the demand, and we're working it."
Unlike Casey, former Qwest chief financial officer Robin Szeliga does have regrets."I regret accepting the CFO position," Szeliga said. "I was not sufficiently experienced for that company, at that time, in that industry."
In November 1997, she joined Qwest as a finance executive and took over as the company's CFO in March 2001 after her predecessor, Robert Woodruff, abruptly retired.
Unlike many of her colleagues, Szeliga did not cash out millions of dollars in stock options.
A month after assuming the CFO position, she sold 10,000 Qwest shares for a gain of $125,000, money earmarked for a home remodeling project. The timing of the sale coincided with some of Nacchio's stock trades that the government focused on as part of its insider-trading investigation.
In 2005, Szeliga pleaded guilty to one criminal count of insider trading. She received two years of probation and a $250,000 fine, and paid $125,000 in restitution. To settle the SEC case in 2007, she agreed to pay $577,000 with no admission of guilt. Szeliga also testified for the government in the case against Nacchio.
She has since garnered support from an unlikely source: Cliff Stricklin, the lead prosecutor in the Nacchio trial.
"Ms. Szeliga fully accepted responsibility for her wrongdoing and worked incredibly hard to correct her mistake," said Stricklin, now a partner with Bryan Cave HRO. "She provided complete and truthful testimony in a matter that was important to the community and did so with poise and dignity."
Although he took over the Nacchio prosecution after Szeliga's criminal case had been resolved, Stricklin said he got to know her "personally and developed a tremendous amount of respect for how she handled a difficult situation."
"Everyone makes mistakes, and
while some mistakes carry harsher consequences than others, not
everyone works to set things right like Ms. Szeliga did,"
Stricklin said. "People like her deserve a second chance to use
their talents to make
Szeliga left Qwest in 2003, taking away a couple of lessons from her time at the company.
"I realized that I wasn't serving the company or myself when I was out of balance and not working well," said Szeliga, who described herself as a workaholic while at Qwest. "When you put your head down and you work too much, you lose perspective."
The other lesson deals with making sure her values aligned with the organization's."I didn't see eye to eye on a number of issues, and I learned from that that I need to follow my gut and my intuition and believe in myself, so that I can hold firm to my own beliefs and my own values," she said.
That may help explain her line of work since the end of the legal turmoil.
"I spent four years working with Big Brothers Big Sisters of Colorado in the nonprofit sector, and it was really rewarding for me," Szeliga said. "I could use my business skills to serve the community and the children in the community who needed support in their life."
Today, she lives in the
"I really find that I'm drawn to people in transition because I've made a lot of transitions in my life," Szeliga said. "I find it a very rewarding experience to be able to help people through that."
If Szeliga was among the hardest hit from the Qwest fallout, the company's former general counsel Drake Tempest may sit on the other end of the spectrum.
He was never charged with a crime.
That fact may have surprised even Nacchio, who often commuted
with Tempest by private jet from the East Coast to
"Tempest knew exactly what Nacchio knew," Nacchio's attorneys wrote in a court filing after his conviction. "Yet Tempest never closed the trading window, never advised the company to change its public disclosures and, as far as the evidence showed, never told insiders not to trade."
A jury found Nacchio guilty of selling $52 million in Qwest stock based on private information about the company's deteriorating financial condition. Nacchio had maintained that the sales were proper because he believed at the time that Qwest's future was bright.
He paid nearly $64 million in fines and forfeitures and was sentenced to 70 months in prison. He was moved to a Brooklyn-based halfway house program in late March after about four years behind bars.
Tempest worked for Qwest from 1997
to 2002. In 2008, he joined Dechert's
"I don't have anything to say," Tempest said in April when reached on his office line.
Beth Huffman, a spokeswoman for the law firm, said last week that Tempest is no longer with the company.Former CFO Robert Woodruff was the last executive to settle the SEC lawsuit, agreeing to pay $2.6 million in 2012 without admitting or denying guilt. He garnered nearly $50 million in profit from selling Qwest stock.
His attorneys said last year that Woodruff "is happy to put this matter behind him." They and Woodruff didn't return calls seeking comment for this article.
Lew Wilks, who worked as a top
strategy officer for Qwest from 1997 to 2001, now serves as
managing partner at Bright Peaks Venture Capital in
Wilks wasn't included in the SEC's sweeping fraud suit. He did not return phone calls seeking comment.
Stephen Jacobsen, viewed at one time as Nacchio's protégé, also sold tens of millions in Qwest stock before leaving the company in 2001 as executive vice president of global business markets. Like Wilks, he wasn't part of the SEC suit.
In 2007, Jacobsen sold his
Former Qwest president Afshin Mohebbi was Nacchio's No. 2, working for the company from 1999 to 2002. He never sold any Qwest shares, but he was named in the SEC suit. A judge dismissed the case against Mohebbi in 2011.
He now serves as an advisor for private investment firm TPG Growth. His attorney, Paul Grand, said the SEC case stalled Mohebbi's life for eight years.
"His life was obviously very negatively affected by the pendency of this lawsuit," Grand said, "and it was pending for a very, very long time until the judge realized there was nothing to it."Andy Vuong : 303-954-1209, firstname.lastname@example.org