accountant OK'd to subpoena files
By Sandy Shore, The Associated Press
Wednesday, November 15, 2005
A former Qwest Communications accountant won the right
Tuesday to subpoena an accounting firm's analysis of how the
company recorded network capacity sales, a method that later
forced it to restate billions of dollars of revenue.
James Kozlowski recalled there being a KPMG analysis of the
transactions, but the report was not included in nearly
three dozen boxes of documents turned over as part of the
government's civil fraud lawsuit, attorney Kevin Evans said.
"He firmly believes there should be work papers and
accounting memos," Evans told Magistrate Judge Craig Shaffer
during a brief hearing. "We're very concerned about the
potential loss of these documents."
Shaffer agreed to allow Evans to issue a subpoena for
specific documents related to four sales in 1998 and early
Outside the courtroom, Evans said the analysis dealt with
whether it was appropriate to book revenue for fiber-optic
capacity sales upfront or over time. The four transactions
were the first that Qwest completed using the upfront
booking method, he said.
The Securities and Exchange Commission has accused Kozlowski
and other former executives of orchestrating a massive
financial fraud at Qwest between April 1999 and March 2002.
Other defendants include former chief executive Joe Nacchio
and former chief financial officers Robin Szeliga and Robert
The SEC said their actions allowed Qwest to improperly
report approximately $3 billion in revenue that helped clear
the way for its 2000 acquisition of U S West.