Ex-Qwest execs face civil trial in 2009
Magistrate lays out deadlines in fraud case filed by SEC
By Jeff Smith
Rocky Mountain News
Saturday, July 21, 2007
The government's civil fraud suit against five former Qwest
executives, including former CEO Joe Nacchio, won't go to trial
until 2009 based on the latest schedule issued by a federal
magistrate Friday. U.S. Magistrate Judge Craig Shaffer set late
2008 deadlines for the exchange of evidence and remaining
matters to be resolved beginning in January 2009.
The defendants and federal regulators have identified 201 people
they want to interview, or depose, including 82 listed by
Nacchio's defense team. Only 15 depositions have been
While a trail isn't likely before 2009, the order indicated the
parties have "considered the possibilities for a prompt
settlement" and said settlement discussions may continue.
Shaffer's scheduling order came a week before Nacchio is to be
sentenced on 19 counts of insider trading in a separate criminal
The civil fraud suit was filed by the Securities and Exchange
Commission in March 2005.
The SEC alleges Nacchio and the other defendants orchestrated or
participated in a $3 billion financial fraud between 1999 and
The defendants include former Qwest Chief Operating Officer
Afshin Mohebbi, former Chief Financial Officer Robert Woodruff
and former Qwest accountants James Kozlowski and Frank Noyes.
Former Chief Financial Officer Robin Szeliga and former sales
executive Gregory Casey settled with the SEC.
Qwest, under current CEO Dick Notebaert, eventually erased more
that $2.5 billion of revenue from its 2000 and 2001 books.
Shaffer's scheduling order noted the SEC objected to Nacchio
listing 80 witnesses that "no other party considers relevant to
Shaffer responded "it is not fair or just" for the SEC to bring
complex claims against Nacchio and then claim it "lacks the
resources" to attend the depositions.
Nacchio's defense attorneys have suggested they will make
classified government contracts an issue in the civil fraud
case. They floated the same strategy in the criminal case, but
the issue didn't come into play, in part because Nacchio didn't
Nacchio has argued he was optimistic about Qwest's financial
condition because he alone possessed information that the
company was poised to land hundreds of millions of dollars of
lucrative classified contracts.
Shaffer wrote he understands that Nacchio wishes to interview
people "whose testimony may implicate the 'state secrets'
doctrine and the Classified Information Procedures Act."
He said he isn't taking a position now on how that would be done
but expects Nacchio to "promptly" contact government agencies
that may have an interest in the matter.
smithje@RockyMountainNews.com or 303-954-5155