Via Wyoming's Casper Star Tribune:

Ex-Qwest CFO pleads guilty to insider trading

By SANDY SHORE
AP Business Writer

DENVER (AP) -- A former Qwest Communications finance chief pleaded guilty to a single count of insider trading Thursday, the highest-ranking one-time executive to admit wrongdoing in the telephone company's multibillion-dollar accounting scandal...

...The SEC has said the fraud at Qwest Communications International Inc., the dominant local phone provider for 14 mostly Western states, occurred between April 1999 and March 2002, allowing it to improperly report approximately $3 billion in revenue that helped its 2000 merger with U S West. Qwest later restated earnings from 2000 and 2001 to erase about $2.2 billion in revenue and then agreed last year to pay $250 million to settle SEC fraud charges in a deal that excluded individual officers. The company did not admit wrongdoing...

Szeliga is the first of the Quest executives under investigation to reach a plea agreement with prosecutors:

Flanked by two attorneys, Robin Szeliga spoke in a soft monotone, her voice breaking just once as she answered the judge's questions about netting $125,000 on a stock sale by using financial information intentionally withheld from the public....Szeliga, 44, faces up to 10 years in prison and a $1 million fine, though the plea agreement recommends a term of 15 to 21 months. She agreed to pay $125,000 in restitution and to cooperate with prosecutors, which could prove valuable in their three-year investigation into accounting irregularities that forced Qwest to restate billions in revenue.

Acting U.S. Attorney William Leone said he was pleased with Szeliga's plea but declined to discuss specifics of her case or the ongoing investigation. "I do feel like the charge we brought today or that she pleaded guilty to today, reflects a fair view of the evidence," he said. Securities attorney Andrew Stoltmann of Chicago said Szeliga's agreement was a significant victory for prosecutors. "Once the CFO flips, that is huge in any case that the Department of Justice is going after," Stoltmann said. "From the prosecutor's standpoint, they kind of use that CFO's knowledge to go after the CEO or anyone higher up than the CFO"...

To that end, in her plea agreement Szeliga admitted that:

...she and other senior executives knew in late April 2001 that some business units would fail to meet revenue targets for the first six months of that year. She said she and other executives also knew that Qwest improperly booked revenue from one-time sales of equipment and fiber-optic swaps as recurring to meet those targets. Szeliga sold 10,000 shares of stock at $41 per share on April 30, 2001, earning a net profit of $125,000...

An investigation into the activities of other Quest execs are still pending.

Full article appears here.

-- MDT

Labels: insider trading, Quest, Robin Szeliga