Ex-Qwest sales chief
settles for $2.1 million
By Jeff Smith
Rocky Mountain News
Wednesday, July 27, 2005
Qwest's former top sales executive has agreed to pay $2.1 million to settle civil charges that he backdated contracts and caused the Denver telco to buy communications capacity it didn't need as part of a revenue-inflation scheme.
In settling the charges, Gregory M. Casey, of Houston, who worked for Qwest between 1997 and 2001, neither admitted nor denied wrongdoing.
Casey, who rose to executive vice president of Qwest's global wholesale markets, has been barred from working as an officer or director of a public company for five years. He has agreed to cooperate with the Securities and Exchange Commission's continuing investigation into Qwest's alleged $3 billion financial fraud between 1999 and 2001.
"We view the settlement as significant, and (his) cooperation was an important factor in reaching the settlement terms," said Mary Brady, assistant SEC regional director for enforcement in Denver.
Casey's attorney, Michael Trager of Arnold & Porter in Washington, D.C., didn't immediately respond to a telephone message request for comment.
The SEC initially asked Casey to return all the $34.9 million in compensation that it said he received from Qwest, but settlements generally are for a fraction. Casey made most of his money by exercising stock options.
The SEC in March sued Casey and six other former Qwest executives, including former CEO Joe Nacchio, alleging they participated in a massive financial fraud.
Casey reached a tentative settlement with the SEC in May and signed his consent to the settlement June 11, but details weren't disclosed until Tuesday.
The former sales executive was a point man for many of Qwest's controversial fiber-optic capacity sales and swaps.
The SEC claimed Casey participated in backdating contracts so Qwest could recognize revenue in a particular quarter.
In addition, they said Casey provided or knew others who had provided secret side agreements with customers who bought communications capacity from Qwest.
The side agreements, which enabled customers to exchange capacity, allegedly were concealed from Qwest's accountants and auditors and invalidated Qwest's revenue recognition accounting.
Moreover, the SEC said Casey, in order to close certain sales or swaps of capacity, caused Qwest to purchase communications capacity that it didn't need.
Casey agreed to return $1.4 million, plus $456,481 of interest, and pay a civil penalty of $250,000.
Qwest as a company agreed last year to pay $250 million to settle SEC accounting fraud charges.