leader may turn witness
By Greg Griffin, Staff Writer
Friday, December 2, 2005
Former Qwest president and chief operating officer Afshin
Mohebbi is likely to testify for the prosecution in a
potential criminal trial against former chief executive Joe
Nacchio, according to sources.
He is not expected to plead guilty to a criminal charge and
may have been granted immunity from prosecution in return
for testimony that could implicate Nacchio, said several
people close to the case who requested anonymity.
Mohebbi, 43, would be at least the second high-ranking
former Qwest official secured by the government as a witness
in the case it is building against Nacchio, who hasn't been
charged. Former Qwest chief financial officer Robin Szeliga
pleaded guilty in July to a felony charge of insider trading
and agreed to cooperate with the government.
Legal experts say the prospect of testimony from Mohebbi,
the company's former No. 2 executive, could be critical for
"It would be significant to have a straight cooperative deal
with an executive at that level. It would indicate they
have very valuable evidence to offer," said Tony Leffert, a
former federal prosecutor and attorney with Robinson, Waters
& O'Dorisio in Denver who is not involved in the Qwest case.
Mohebbi's attorney, Paul Grand, would not comment on his
client's status in the criminal investigation. Mohebbi did
not return a call late Thursday. Representatives of the
U.S. Attorney's Office would not comment.
Prosecutors are expected to seek an indictment against
Nacchio from a federal grand jury in the next few weeks.
They have said in court filings that their investigation
focuses on insider trading and disclosure issues in 2000 and
Nacchio sold Qwest stock for a profit of $176.5 million from
1999 to 2001 while he allegedly led a fraudulent scheme to
inflate revenues and mislead investors, according to federal
regulators. The Securities and Exchange Commission sued
Nacchio and other former Qwest executives in March.
Attorneys for the former Qwest CEO have said Nacchio sold
his stock using established legal procedures and that Qwest
met its disclosure obligations.
Nacchio's legal team also plans to argue that he knew of
lucrative, secret national-security contracts that Qwest was
in line to receive from the government at the time he was
selling shares, according to a Wall Street Journal report
last week. According to the theory, that knowledge would
indicate that Nacchio was not misleading investors with
positive talk about Qwest's financial condition prior to the
stock's plunge in 2001 and 2002.
His attorneys, Charles Stillman and Herbert Stern, did not
return calls for this story.
In their case against Szeliga, prosecutors focused on a
period in late April 2001 when Qwest executives allegedly
knew the company would not make its revenue projections
without booking questionable deals.
The government charged Szeliga with selling 10,000 Qwest
shares on April 30 for a pretax gain of $125,000. Nacchio
sold 760,000 shares worth $30 million from April 26 to 30,
according to Thompson Financial.
Mohebbi did not sell a single share of Qwest stock while he
worked there, making him a difficult target for
prosecutors. He was known as a capable operations chief who
countered Nacchio's volatile personality.
But Mohebbi hasn't been above suspicion. The SEC singled
him out for pushing the sales force to close questionable
deals, sometimes in the last days of the quarter. The SEC
also said Mohebbi and others entered into secret side
agreements and falsified documents to hide those deals from
Qwest's accountants and outside auditors.
In a May 2001 e-mail, Mohebbi told a colleague, "Business is
in bad shape ... need a ton of one-time items to make the
quarter," according to the SEC.
Mohebbi came to Qwest from British Telecom in May 1999 and
left in December 2002, several months after Nacchio
Staff writer Greg
Griffin can be reached at 303-820-1241 or