SEC defends fraud claims against ex-Qwest official
By Steve McMillan, Staff Writer
Denver Post
Tuesday, June 7. 2005

Four claims against former Qwest accountant James Kozlowski in connection with a massive financial fraud at the Denver phone company meet legal requirements and should not be dismissed, attorneys for federal regulators said Monday in a court filing.

Kozlowski's attorneys said in a mid-May filing that the Securities and Exchange Commission hadn't provided specific facts to suggest Kozlowski made false claims about sales of fiber-optic capacity with the intent to deceive investors.

They asked for dismissal of those claims, saying that Kozlowski followed the directions of high-level executives regarding removal of some financial information from reporting documents.

But the SEC responded that Kozlowski, as Qwest's senior director of financial reporting, fraudulently approved revenue recognition from the fiber sales.

"Rather than arguing the facts and law, which do not support his motion, Kozlowski relies heavily on emotional overstatements," the SEC filing says. Right-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet.
Right-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet.
Kozlowski worked as an accountant for Qwest from 1998 to 2000.  He is one of 12 former Qwest executives, including former chief executive Joe Nacchio, who were sued by the SEC for allegedly inflating the company's financial performance and misleading investors.  Seven of the executives have agreed to settle their cases.

The filing was made in U.S. District Court in Denver.

Staff writer Steve McMillan can be reached at 303-820-1695 or smcmillan@denverpost.com.

http://www.denverpost.com/business/ci_2785830