Former Qwest CEO hit with civil charges in fraud scheme

WASHINGTON - US regulators filed civil fraud charges Tuesday against former Qwest chairman and chief executive Joseph Nacchio and eight others, alleging a scheme to vastly inflate the finances of the telecom giant.
The Securities and Exchange Commission said it filed civil actions against the executives alleging that between 1999 and 2002, they "engaged in a multi-faceted fraudulent scheme designed to mislead the investing public about the company's revenue and growth."
As a result of that scheme, Qwest "fraudulently recognized over three billion dollars of revenue and excluded 71.3 million in expenses," the SEC said in a statement.
Qwest, the big regional telecom giant, settled its role in the case last year by agreeing to pay a 250 million dollar penalty.
"The disclosure fraud at Qwest was orchestrated at the highest level of the company to deceive investors," said Randall Fons, SEC regional director in Denver, Colorado.
"Qwest's CEO and other top executives projected revenue and earnings that they knew were overly aggressive, and then all of the defendants used smoke and mirrors to meet those unrealistic projections. These individuals must now answer for their conduct and the enormous decline in shareholder value that they caused."

03/15/2005 20:01 GMT