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The Association of U S West Retirees
 

 

 

Ex-Qwest CFO gets probation
Tearful Szeliga admits she made error in judgment
By Jeff Smith
Rocky Mountain News
Saturday, July 29, 2006

A tearful and remorseful former Qwest Chief Financial Officer Robin Szeliga on Friday acknowledged she made an "error in judgment" and had "strayed from the Lord's guidance" when she sold stock in April 2001.  Her statement came minutes before she was sentenced to two years of probation and six months of home detention for one count of insider trading.  She also was fined $250,000 for a trade that netted her $125,000.

She had already repaid the $125,000 into a fund for affected Qwest stockholders.

"My life is forever changed by this mistake," Szeliga told U.S. District Judge Walker Miller in a packed courtroom.  "Most importantly, I have had to come to grips with my own failings and demons."

Szeliga's voice quavered as she softly read her statement.  Afterward, she was embraced by family and friends.  She left the courthouse hand-in-hand with her mother.

The sentencing sets the stage for the final step of the government's prosecution against former Qwest executives:  the case against former Chief Executive Joe Nacchio.

Nacchio faces 42 counts of insider trading in connection with selling $101 million of stock in the first five months of 2001 while allegedly knowing the Denver telco's financial condition was deteriorating.  He has repeatedly denied wrongdoing.  Szeliga is expected to be one of the prosecution's key witnesses should the case go to trial.

Szeliga could have gotten 15 to 21 months in prison, but government prosecutors recommended leniency based on her extensive cooperation.

U.S. Attorney for Colorado William Leone described Szeliga as "uniquely situated" and said her assistance was "complete and central" to the government's investigation.  Prosecutors say that in some cases Szeliga was one of only three witnesses to key conversations.

Miller handed down a sentence identical to the one imposed on former Qwest Executive Vice President Marc Weisberg, who was accused of improperly pocketing millions of dollars from vendors.

Szeliga's attorney Terry Bird objected to the size of the fine, but Miller said he would have a difficult time explaining a smaller penalty to Qwest employees who had lost a significant portion of their retirement income as the company's stock fell from $40 to $60 a share to less than $2 at one point.

"(The fine) is intended to punish," Miller said.

Her voice trembling, Szeliga, 45, who became chief financial officer during the critical first half of 2001, said she had spent many hours of soul-searching over her mistake.  She said she hoped she could turn the pain and hurt into something good for her children and others.

"From this very broken place, I hope that I can share some of the lessons that I learned," she said.

Szeliga said the pain was being absorbed not only by herself but by her husband and young daughters.  "Each of us will have to deal with this one way or the other for the rest of our lives."

Bird said Szeliga -- once a rising star among Colorado finance executives -- is unemployable but on occasion teaches yoga, volunteering her time.

He said he had seen his client suffer through guilt and depression, and praised her for courage in taking responsibility for her mistake.  Dozens of letters of support were written by friends and family.

Home detention details haven't been worked out.  But generally, a defendant is required to wear an ankle bracelet about the size of a garage door opener that monitors their proximity to their home.  Defendants are allowed to go to work and to medical appointments and such.  It's unclear whether Szeliga would be allowed to attend yoga classes.

Bruce Allen, a Denver investment manager who has followed the Qwest case closely and witnessed the sentencing, was struck by the heavy toll the case had taken on Szeliga.

"From a human level, it's really remarkable to see how much one person's mistake has cost her," Allen said, "and even with all her efforts to cooperate and to make amends for her mistake, her life is irrevocably changed."

Several of Nacchio's lieutenants, including Szeliga's predecessor, Robert Woodruff, made tens of millions of dollars each exercising stock options.

But former federal prosecutor Christopher Bebel of Houston said prosecutors wouldn't bring criminal charges unless they could prove the executives had knowledge of the "accounting sleight of hand" at the time of their sales.  Woodruff faces civil charges.

Bebel said it could have been worse for Szeliga.

"The leniency displayed by the judge clearly is designed to recognize the cooperation she has extended," Bebel said.  If she hadn't cooperated fully, "there would have been little chance for her to avoid a significant term of imprisonment."

Bird said prosecutors have nothing to worry about Szeliga being sentenced prior to a potential Nacchio trial.

"She will continue to offer full and truthful testimony," Bird told reporters after the sentencing.

Bebel said prosecutors always can use a carrot-and-stick approach if needed:  File a motion for her sentence to be reduced if they're pleased with her continued cooperation, threaten her with perjury if she's untruthful.

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_4879004,00.html