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Ex-Qwest exec sentenced
Former CFO Szeliga admitted insider trading
By Andy Vuong, Staff Writer
Denver Post
Saturday, July 29, 2006

Former Qwest chief financial officer Robin Szeliga was sentenced to two years' probation, six months of home detention and a $250,000 fine for making an illegal insider trade in April 2001 -- before the Denver-based phone company's financial troubles were publicly disclosed.

U.S. District judge Walker Miller issued the sentence Friday morning after listening to peals for leniency from Szeliga, her defense attorney and federal prosecutors.

"My life has forever changed," said Szeliga, her voice trembling at times.  "I had to face public humiliation as well as career and financial devastation."

Szeliga, the highest-ranking former Qwest executive to be convicted of a crime, said she was remorseful and deeply regretted her actions.

"I had strayed from the Lord's guidance," she told the court.

Szeliga's family, including her mother, and friends attended the hearing in Denver.

Szeliza, 45, is expected to be a key witness in the pending insider-trading case against former Qwest chief executive Joe Nacchio.  His trail may not start until 2007.

Szeliga pleaded guilty in June 2005 to one count of illegal insider trading and faced a maximum sentence of 10 years in prison and a $1 million fine.

The government recommended that she receive a maximum sentence of six months in jail.

Szeliga joined Qwest as vice president in finance in November 1997.  She gook over as Qwest's CFO in March 2001, just a month before she committed the illegal insider trade.

When Richard Notebaert took over as Qwest chief executive in mid-2002, he named Oren Shaffer CFO but kept Szeliga as executive vice president of finance.  She left the company in August 2003 and was indicted in June 2005.

In asking Miller for a lighter sentence, U.S. Attorney Bill Leone said Szeliga is in a position to provide "indispensable testimony" in the Nacchio case.

The government charge Nacchio in December with 42 counts of illegal insider trading.  Nacchio sold $100.8 million in stock from January to May 2001.  The government alleges that he knew then, but did not disclose to the public, that Qwest was in unstable financial condition.

Nacchio, who left Qwest in June 2002, has pleaded not guilty.

Leone also said Szeliga provided substantial information and testimony during previous fraud cases against other former Qwest executives.

Terry Bird, Szeliga's attorney, asked for the $250,000 fine to be reduced, saying that Szeliga was close to being tapped out financially.  He said Szeliza has had a hard time finding another job, working only for a short time as a financial analyst with a private metro-Denver company.

Miller said Szeliga still had "significant" financial assets after reviewing her financial situation.  In 2001, Szeliga made $531,000 in salary and bonuses, according to Qwest regulatory filings.

"I do believe this offense is serious," Miller said.  "The offense is one that deserves a punishment that" would deter others from committing it.

Bird said afterward that he was pleased with the sentence and that he doesn't plan to appeal.  Miller gave Bird 30 days to work out a deal with the Securities and Exchange Commission on civil fraud charges so that the $250,000 fine could go toward any potential fine issued by the SEC.

The $250,000 fine is on top of the $125,000 that Szeliga already has paid in restitution to cover the ill-gotten gains she made from the insider trade on April 30, 2001.  That money will go toward a fund that the SEC plans to distribute to victims of Qwest's alleged financial fraud.

The SEC said the fraud at Qwest occurred between April 1999 and March 2002.  Qwest, without admitting or denying guilt, settled the SEC charges against it in 2004 and paid a $250 million fine.  Prior to that, Qwest restated $2.5 billion in revenues for the years 2000 and 2001.

Staff writer Andy Vuong can be reach at 303-820-1209 or
avuong@denverpost.com.

http://www.denverpost.com/business/ci_4107432