tangled in Enron Broadband
'01 DEAL TARGETED
By Greg Griffin, Staff Writer
Friday, May 26, 2006
Two months before Enron
collapsed in late 2001, it swapped fiber-optic network
capacity with Denver-based Qwest in a deal regulators say
allowed the companies to fraudulently inflate their
The swap -- in which Enron's broadband unit agreed to pay
Qwest $195 million and Qwest agreed to pay Enron $308
million -- is one of a handful of similar deals at the
center of the Securities and Exchange Commission's fraud
case against former Qwest executives.
Qwest spokesman Bob Toevs declined to comment Thursday on
the Enron deals because they remain part of pending
Qwest's dealings with the energy giant were part of lawsuits
by the SEC and shareholders alleging accounting fraud.
Qwest settled the SEC case in 2004 by paying $250 million,
and it has reached an agreement to pay $400 million to
settle the shareholder litigation. It neither admitted nor
denied guilt in either case.
Qwest made a $222,707 claim against Enron Broadband when its
parent filed for bankruptcy Dec. 2, 2001. Broomfield-based
Level 3 Communications topped the list of unsecured
creditors of Enron Broadband with a $7.2 million claim.
In the 2001 swap between Qwest and Enron, the SEC says Qwest
intentionally paid $36 million and $75 million in excess of
fair-market value for Enron's network capacity, which it
described as having on "scrap value."
Qwest also backdated the contract so it could book $85.5
million of the revenue it received from Enron in the third
quarter, the SEC said.
The former Qwest executives being sued by the SEC have
denied the charges and are seeking to have them dismissed.
Staff writer Greg
Griffin can be reached at 303-820-1241 or email@example.com.