Qwest CFO in hot seat
Szeliga likely to face defense's wrath in Nacchio case
By Andy Vuong and Greg Griffin, Staff Writers
Monday, July 31, 2006
Former Qwest chief financial officer Robin Szeliga appears
headed for the same scorching seat that ex-Enron CFO Andrew
Fastow once occupied.
Fastow was the star witness in the fraud and conspiracy
trial of former Enron chairman Ken Lay and former chief
executive Jeff Skilling. On the stand, Fastow endured
taunts and personal attacks from the defense.
Szeliga is expected to be the star witness in the
government's insider-trading case against former Qwest CEO
Joe Nacchio. Experts say she will also likely face
significant heat on the witness stand.
In December, the Justice Department charged Nacchio 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. Szeliga committed illegal insider trading in April
2001, within the same time frame that Nacchio is accused of
committing illegal insider trading.
U.S. Attorney Bill Leone said Friday that Szeliga is in a
position to provide "indispensable testimony."
Former federal prosecutor William Mitchelson said Szeliga
will be center stage.
"Having someone like Szeliga, who can give context to what
Nacchio knew and when he knew it, is critical to prosecuting
that case," said Mitchelson, now a white-collar criminal
defense lawyer with Alston & Bird in Atlanta.
Szeliga was sentenced Friday to two years of probation,
including six months of home detention, and a $250,000 fine
for illegal insider trading.
A trial date in Nacchio's case hasn't been set. It likely
won't happen until next year. Nacchio faces up to 10 years
in prison and a $1 million fine on each of the 42
Several former federal prosecutors said that it's uncommon
for key witnesses to be sentenced before giving their
"Once a government witness is sentenced, it's possible they
could lose their incentive to cooperate.
Sentencing holds a hammer over their head," said Robert
Blume, a former federal prosecutor in Washington, D.C., now
in private practice with Gibson, Dunn & Crutcher in Denver.
The Justice Department said it is not concerned that Szeliga
will lose motivation.
"Robin Szeliga's plea agreement requires that she cooperate
with the government's investigation up to and including
testimony. ... That cooperation does not end after she is
sentenced," said Jeff Dorschner, a spokesman for the U.S.
attorney's office in Denver.
Terry Bird, Szeliga's attorney, said Friday she still
intends to fully cooperate.
Former HealthSouth Corp. CFO William Owens pleaded guilty to
fraud and conspiracy charges. He then provided key
testimony against Richard Scrushy during the former chief
executive's fraud trial last year. Scrushy wasn't
convicted, but Owens was later sentenced to five years in
Former WorldCom chief financial officer Scott Sullivan
pleaded guilty to fraud and conspiracy charges. He was
sentenced to five years in prison in August after providing
key testimony that helped convict former chief executive
Bernard Ebbers. Ebbers received 25 years in prison, a
conviction upheld Friday by a federal appeals court.
Fastow pleaded guilty to two counts of conspiracy and
received a sentence of 10 years in prison. Fastow, an
architect of Enron's fraud, received that sentence before
testifying to Lay's and Skilling's roles. Lay and Skilling
were convicted in May, primarily on fraud and conspiracy
charges. Skilling, who has appealed his conviction, faces
up to 10 years on each of 19 counts. He could be sentenced
later this year. Lay died this month.
Fastow was grilled extensively by defense attorneys, who
tried to undermine his credibility for having reached a plea
deal with the government.
The attacks were sometimes personal. In one exchange,
Skilling attorney Daniel Petrocelli said, "Your greed was so
great that you allowed your wife to go to prison."
Fastow's wife, Lea, was sentenced to one year in prison
after pleading guilty to a misdemeanor tax crime.
Legal experts expect Szeliga to also face significant heat
on the witness stand.
"She's going to be attacked by Nacchio's lawyers as having
been bought and paid for by the government prosecutors,"
Mitchelson said. "She's going to be subjected to withering
cross-examination by the Nacchio defense team."
Szeliga, 45, joined Qwest in 1997 as vice president of
finance. In March 2001, she became Qwest's CFO, succeeding
Robert Woodruff. Szeliga was replaced as CFO in 2002, left
Qwest in 2003 and was indicted in 2005.
April 2001 appears to be at the center of the Nacchio
According to the U.S. Securities and Exchange Commission's
civil charges against Nacchio and court documents, the
following occurred during that month:
On April 24, Nacchio and Szeliga issued Qwest's
first-quarter earnings release ... (and) ... falsely claimed
in the release that Qwest's growth stemmed from various
On April 29, Nacchio stated fraudulently (on Fox News
Channel) that "most of our growth comes from development of
new products ..."
On April 30, Szeliga exercised 10,000 stock options and sold
the shares, netting a profit of $125,000.
Staff writer Andy Vuong
can be reached at 303-820-1209 or