A quartet of former Qwest Communications International Inc. executives are
facing federal fraud charges related to an ongoing investigation of overinflated
revenue practices at the Denver-based Baby Bell.
A federal grand jury in Denver handed down a 112-count indictment charging
that the four executives, under pressure to meet a $1.825 billion revenue target
in late 2001, put together a sleight-of-hand scheme to inflate Qwest's revenue
by more than $33 million.
According to the indictment documents, the four billed $33 million worth of
Internet-access equipment sold to the Arizona School Facilities Board and
reported the income before the gear had been delivered -- a violation of
Securities and Exchange Commission rules.
They then falsified documents to cover up their actions, according to the
indictment.
Arrest warrants have been issued for former global business executives Grant
Graham of Evergreen, Colo., chief financial officer; Thomas Hall of Englewood,
Colo., senior vice president in the government- and educational-solutions group;
John Walker of Littleton, Colo., a VP in the government- and
educational-solutions group; and Bryan Treadway of Atlanta, an assistant
controller.
The four have 48 hours to surrender to authorities.
"As we continue our efforts to battle corporate fraud, our message is clear,"
U.S. Attorney General John Ashcroft said in a prepared statement. "We will
protect the integrity of our markets by punishing those who falsify financial
information out of sheer greed."
Qwest has been under investigation by the Securities and Exchange Commission
and the U.S. Attorney's Office in Denver since last summer.
Investigators are focusing on charges that the Baby Bell inflated revenue
using transmission-capacity swaps with other carriers.
The telco has said that it will restate some $2.2 billion in revenues
stemming from optical-capacity swaps made in 2000 and 2001. It is also trying to
cut its hefty debt load, which now stands at about $20.4
billion.
